Franchising your small business can be a great way to achieve business growth while minimizing the overhead costs involved in opening additional locations yourself. When you franchise a small business, you are essentially leasing to another entrepreneur the rights to use your business model, brand and standardized operational strategies. In exchange for the franchise fees and royalties paid to you, the franchisee gets a proven business model and ongoing support to make the business venture a success. Although the process of franchising a small business can be challenging, it can also be professionally and financially rewarding.
Items you will need:
- Business plan
- Standard operation procedures manual
- Marketing materials
- Necessary legal documents (franchise contracts, licenses and registrations)
Conduct an objective business analysis to determine if your business should be franchised. Consider if your product or service is unique and competitive enough to profit within multiple markets and be attractive to many other entrepreneurs. Is the business making enough profit (with substantial margins) to justify the expansion? Is the business model easy to replicate for another businessperson; managers and employees? Is the target market for the business large enough to support multiple locations?
Formalize your business operations into an easy-to-follow, step-by-step plan. You should cover as many operational aspects as possible from the purchase of the opportunity through the profitable completion of the first year or two of franchise operations.
Compose a marketing and branding strategy manual. This separate guide will help the franchisee attract more customers and additional brand equity for your business. You will need to clearly show how to use and develop the company brand and image as part of a successful competitive strategy.
Draft your franchise contracts, leasing and royalty agreements; have these documents reviewed by a franchise attorney or a professional familiar with the franchising of business entities.
Register your business with the secretary of state if franchising your business changes your state tax liability. You will need to check with your local office if this step is applicable to your situation.
Develop your comprehensive business prospectus that will sell the franchise concept to potential franchisees. Your prospectus should include the business concept, competitive strategy, geographic/location strategy, marketing strategy include samples of marketing materials), franchise and royalty fee schedules.
Hire a service and support team to help direct the efforts of your franchisees. Your service and support team can be responsible for answering franchisee concerns and ensuring quality control. Establish your service standards and insist on high internal quality.
Market and sell your franchise opportunity, being sure to carefully screen and select your franchisees. Remember, your success is dependent on theirs.
By: Malik Sharrieff, Demand Media