Franchise Article Author: The Franchise Guide
An existing company, with one or two company owned operations, can gain significant benefits by franchising their operation. However, the first step is to evaluate your company as a franchise as objectively as possible.
Franchising your business has tremendous advantages, from a higher return on investment (ROI) to risk reduction and retention of capital. But before you begin the process of franchising your business, you must be familiar with the fact if your concept and operating system are franchisable and then the question will arise how to franchise a business?
Before we get into the fact how to franchise your business let us discuss some basic tenants of franchisability.
1.Credibility. A franchiser must be credible to prospective franchisees.
2.Uniqueness. Your business must have sufficient differentiation from other franchises either in terms of products and services, marketing, lower investment cost, or target market.
3.Straightforward operations. Your system and business model should be relatively easy for a new franchisee to learn in a short time frame.
4.Adaptability and demand. Your concept should adapt well to many locations and there should be sufficient demand for your products/services.
5.ROI: A franchised business should have enough profit after paying fees and royalties to earn an adequate return on investment.
6.Strength of management. Even the most successful company will falter without a strong management team in place.
Once your business passes this litmus test, we can come to the point as how to franchise your business. The first and foremost step as to franchise one’s business is that you will need a franchise plan and a business plan for franchising. A franchise plan is not the same as a business plan. Essentially, the franchise plan is a plan for franchising your business, detailing all of the steps you will take, as well as the franchise fee. The business plan outlines your overall business strategy over the next five years. Next step to franchise your business is that you will need an operations manual and training programs for your franchisees. Next step to franchise your business is to make a legal agreement. This legal agreement is used to legally sell franchises. Once you buy a franchise or establish a new one you have to take care of fact that there can be a need to sell it. For this, you must draft a franchise agreement and a Uniform Franchise Offering Circular (UFOC) and file with the appropriate state and national authorities. A franchise attorney can help you create these documents and meet the legislative requirements. One of the main reasons franchising is attractive to franchisees is that they are buying the rights to use an established trademark and/or brand name. If you have not already done so, make sure that your intellectual property rights are available and register them. In order to sell franchises, you will need a marketing plan.
Once you know ‘how to franchise’, you can analyze your resources and start your own franchise outlet.
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