Your business is very successful and you want to start franchising? What do you look out for? What do you do? There are many pitfalls in franchising, but concept and timing are critical. The first thing you need to concern yourself with is concept. How many competitors in the category that you are in? Let’s take pizza for example, well over 500 chains in this category, so what sets you apart and makes you different? Are you Domino’s and you focus on delivery? Or are you Little Caesars with the 2 for 1 concept? You need an edge, what sets you apart from the others?
If you don’t have a specialty you need one. Got great meatballs? Become the meatball king. What is it you are best at? If you don’t have it, come up with something. Remember if I am a franchise candidate, why should I buy your concept if there is nothing special about it? Get good at one thing and push it to the forefront.
Every good concept is able to paint a good picture with a formal profit & loss statement. I am not just talking about the company overall, but more importantly at the store level. The financial piece is critical and is the measuring stick for future and continued success. If every franchisee has his/her own different statement, how can you measure it as a group. You should also have biannual meetings or workshops to discuss acceptable percentages of each item category for the P&L. For instance, what should be the projected labor as a percent of gross sales? 20% 30%? You keep your franchises successful by keeping them in a set format with projected percentages. In the food business, food, paper and labor percentages are critical.
Another critical piece is legal documents. You will need to develop a Franchise Disclosure Document or FDD. This is basically everything about your company from it’s principals to it’s financial status. It’s the law and you will need to not only have one but file it in some states that require registration. it needs to be updated on an annual basis. It is always a good idea to find a good franchise attorney so that it is prepared correctly.
Training, at the core of a great franchise concept is it’s ability to train people to run it as well as you do. If you can’t teach them, your concept will fail. Consider classroom training, a 1-800 help number for problems tied directly into your office and video library with internet access to training video’s.
It is always best when considering a franchise to pick the right people to help you build it. Find someone with a background in franchising that can assist you in the process. It may cost you initially but will save you in the long run. A great example is a group that I know of that spent $ 65,000 on training videos. They were great, state of the art, but another group spent $10,000 rolled them out in less time with a more than adequate product. A good franchise leader that has been there, done that may cost you, but at the end of the day could save you considerable money.
Bob Moglia http://www.linkedin.com/in/bobmoglia Do you need help with your concept? CONTACT ME