Your business has grown beautifully and you now have several satellite locations to serve a growing customer base. You’re facing the prospect of opening more satellites but that means finding new locations and new employees. The paperwork and taxes involved are a nightmare. You’re ready to release control of some of the responsibility of your business but you don’t like the idea of licensing your name. You want to protect your business name and be sure new partners will deliver the same service people have come to associate with your name. Franchising seems a good way to go but you have no idea how to form a franchise.
Before you look for franchisees give yourself the security of a plan. Determine if the potential earnings from franchising will support the network you’ll need to put in place. If the prospective profit margin is too narrow to support both you and the franchisee this may not be a good way to go.
Develop training material and programs in advance. Your business reputation depends on your franchisees being able to provide the same quality of service you do, so be ready to teach them how to do it. This is a major expense compare the cost against the prospective results in advance.
Contracts protect both you and the franchisee. You can attract quality franchisees with a fair contract to protect the partnership. Get your legal team in place before you look into how to form a franchise. You’ll save yourself tremendous expense.
The most common cause of franchise failure is greed. Once you start franchising and making money its easy to fall into the trap of growing too quickly. Plan your franchising options around your ability to offer support to your franchisees and your customer base. Plan how much growth and where you want that growth to occur before you begin.
Right now your head is already swimming with the details of doing business and the idea of doing all this planning before you even begin to learn how to form a franchise is frustrating. It will be worth it in the long run though. By planning your course before you start you’ll have a clearer idea of where you’re going and how long it will take you to get there. If you are doing enough business to consider franchising you should already have legal representation. You can give the task of contract preparation to them. You have an accountant give the job of planning for the future and weighing the pros and cons to them. A business manager or a good consultant is a good idea now if you don’t already have one.
Put your team to work. Give them a deadline and then have a meeting to discuss your options. Nothing in the world will aid your success in forming a strong franchise than a having a solid foundation to build on.