Franchising a business is a good way to expand it without using your capital or asking investors for money. Franchisees provide you with the opportunity to sell more of your products, which can translate to more profit. But, all of these require that everything runs smoothly while you take your business to the next level, which is only possible if you make well-informed decisions beforehand.
That being said, read on to find out five things you need to know about franchising your business:
1. A Good and Replicable Business Concept Is A Must
Before you decide to franchise your business, you need to make sure you offer something good, not only to customers but also to potential franchisees. Remember, your franchisees’ ultimate goal is to make money through sales, and that’s only possible if the products you offer, as the franchisor, are saleable.
The concept should also be replicable. This means the concept doesn’t require your personal touch to satisfy the franchisees’ (and therefore your) potential customers. If your product can be delivered to different customers in a consistent manner, then it can be franchised.
2. A Good Lawyer Is A Necessity
Franchising your business requires dealing with the law in a number of ways. For instance, franchisors and franchisees are both regulated by existing laws in the country where they operate. In Australia, for example, one of the primary laws governing parties in a franchising business is the Franchising Code. In the United States, it’s the Federal Franchise Rule enforced by the Federal Trade Commission. And in China, it’s the Commercial Franchise Administration Regulation.
But, it’s not only the franchisors and franchisees that are regulated by existing legislation. The relationship between the parties with respect to the leased property for the franchise requires expertise in commercial property law. The lease agreement should, after all, be structured in such a way it’s binding on both parties, and that it protects the interests of both.
There are also the legal questions of who should hold the lease agreement, and what happens should a franchisee opt out of the franchise network.
Given these things, it’s a must that you hire a good lawyer who specializes in commercial property law and can explain to you the legalities of franchising your business.
3. A Careful Selection of Franchisees Is Needed
Contrary to popular belief, having sufficient cash shouldn’t be the only criteria when choosing a potential franchisee. You should have a set of criteria in place for your franchisees before you choose. This is because once you start franchising, you won’t have as much control over your franchisee, who’ll essentially be the one to represent you.
The franchisees you choose should also have the necessary skills to achieve success when running your franchise. They should develop a strategy for the success of the franchise.
Ultimately, their success is also your success. In the same manner, their failure is also yours. So, set up an interview, get to know the people applying for your franchise, and don’t immediately settle.
Here are some questions you can ask them:
- What skills do you have that’ll make you a successful franchisee?
- If any, who will assist you in running the franchise? What are their qualifications?
- How will you promote your franchise?
- What’s your long-term operational strategy for the franchise?
4. Clear Guidelines On The Use Of The Brand Should Be Established
As the franchisor, you should do all the necessary things to protect your brand. This means setting up clear guidelines on its proper use.
Although franchises acquire a rather independent nature, you still have the right to step in if you think the franchisee’s use of your brand is no longer in line with your core values.
Here are some components your brand guidelines should include:
- Brand Overview: This is an explanation of what your brand is and what it represents. This will enable the franchisee to know the personality of your brand, which in turn will allow them to create ways to promote it.
- Mission and Vision Statement: These are statements summarizing the core values of the brand. This will give the franchisee an idea of what values to uphold when running the franchise
- Brand Appearance: Your guidelines should clearly state how your logo should appear in promotional activities. This will ensure uniformity within the franchise network.
- Quality Control: Your guidelines should include the proper ways to treat the product to ensure uncompromised quality.
5. Continued Interaction With Franchisees Is Important
Your role as the franchisor doesn’t end once you allow someone to represent you as a franchisee. Although franchisees acquire a certain degree of independence when running the franchise, this doesn’t mean you stop checking up on them once in a while.
You can either message them or call them once in a while. If they reach a milestone in their franchise, then be there to extend your support and provide incentives. Apart from the fact that this will nurture your relationship with your franchisee, it’ll also encourage them to do better. Take note, if your franchisees are doing well, you’re also doing well.
Franchising your business can be daunting at first, but if you know what you’re getting into, you can make the necessary adjustments to ensure the success of your franchising network. Take a deep breath, and learn as much as you can. Read a lot, consult experts and those who have had experience in franchising their businesses. If you do all these things, there’s no reason you can’t reap the benefits of your hard work.