Franchising has been a very popular form of conducting business for a long time. The franchise model of business presents many advantages and opportunities to the table. If done correctly, franchises have the potential to highly benefit a company. Franchises, through the power of a common trademark, can achieve things that individual businesses can. Hence, franchising your business is a great idea.
However, before you consider the franchise model for expanding your business, there are some points to keep in mind in order to ensure minimum roadblocks and a successful franchise model. In this article, we will provide you with a quick checklist before you truly take up franchising.
1. The Franchise Operational Manual
The operational manual for your franchise model is the most important thing to prepare before you uptake the franchise model for your business. The operational manual will contain the detailed structure of your franchise model. It will contain the guidelines that franchisees need to follow along with the terms and conditions. It will also lay down your powers and control as a franchisor over the franchisees.
Most importantly, the operational manual will contain the entire framework of your franchises. It will present to the franchisees, the steps to operate their individual franchises. This is the most crucial thing as it is the operational manual that will ultimately decide if your business would be able to expand via franchising. Therefore, having a well laid out franchise operational manual is imperative. Without a proper operational manual, franchises would cease to exist.
2. Training
Before you start selling your brand name to individual franchises, you need to make sure that the franchisees are properly trained and understand the goals of your company. For this, you need to conduct training sessions with the franchisees regarding the business model. You need to educate them about the fundamentals of the operational manual and explain in complete detail how the franchises will be carried out.
You also need to convey to them the goals of your company and what it strives to achieve through the franchise model so that they will have a clear mindset about how they need to carve their individual franchises. It is also advisable to message them about the mission and vision of your company so that they can relay it to the consumers in order to establish trust with them.
3. Quality of Product
Since franchisees will be using the brand name and trademark of your company, it is imperative that you ensure that the franchises live up to it. The way the franchises carry out business operations will affect your brand value as the franchises would be the face of your company. It will be through the franchises that consumers will connect to your brand.
If a franchise fails to properly conduct business, every other franchise will be affected by it in a negative way. If a franchise does not maintain the quality of the product that your brand promises, then your brand will be blamed and not just the franchisee. Thus, it is overriding that you conduct regular quality checks for all the franchises. It is also a good thought to present franchisees with a strict standard for product quality during the training sessions.
4. Marketing
Though the marketing of individual franchises at the ground level will be done by franchisees themselves, it is nonetheless important that you market your brand properly. In the franchise business model, you need to market your brand in two ways- one to draw consumers to your products and second, to draw new franchisees to your brand.
Both of these two types of marketing are necessary as both consumers and franchisees will provide you with a revenue income. You need to conduct extensive market research to understand the needs of consumers. At the same time, you need to put effort into understanding what would attract prospective franchisees. Then utilize this information to market your brand accordingly.
5. Your Franchise Model
The model that you choose for franchising your business will have a huge impact on the overall success of your business. This is due to the fact that the franchise model will decide how operations will be carried out at the ground level. It will also decide whether franchisees would want to buy your franchises or not. This is because franchisees are the ones who will conduct business at the ground level.
They are the ones who will take care of day to day responsibilities and interact with customers. Hence, they will be needing some individual control over their franchises. They would also demand a franchise model that presents them with opportunities for growth. If your franchise model does not fulfil these demands of franchisees then they would not exhibit interest in your company. Thus, it is important that you craft a franchise model that benefits not only you but also the franchisees.
6. Initial Funds
Setting up a franchise requires funds. Even though franchisees will conduct the business operations at their own operational costs, you (the franchisor) are the one who needs to make the initial investment to get things underway.
The initial phase of franchising demands a lot of attention from the franchisor in the form of capital. The franchisor is the one who will have to take care of the bulk of the expenses of franchising. These expenses are present in the form of training, marketing, checking the work of franchisees, quality control etc. Therefore, before you decide to jump on board with franchising, ensure that you can handle the expenses that you will be thrown your way.
7. Seek Legal Advice
Last, but definitely not least, you need to take care of the legalities of your franchise model before setting up franchises. But the legalities related to franchising are quite complicated and take time to understand. Thus, it will be best if you seek the advice of a lawyer who specializes in franchising. He or she will guide you through the legal processes before adopting the franchise model for your business and get the necessary paperwork done.
You should also consider hiring franchise experts to gain valuable knowledge about franchising and understand it better. Experts will also provide you with invaluable advice about how to set up franchises to successfully expand your business.
Conclusion
If you are looking to expand your business, franchising can be a great way to do so. But before you decide to be a franchisor, you should surely take care of certain things so that you minimalize the chances of failure. In this article, we talked about the 7 factors that you should check before taking up the franchise model for your business.
You must also understand that not every business is suitable for franchising. Though most businesses have a high chance of success through franchising if done correctly, there are some that do not. Hence, before considering franchising, evaluate your business structure carefully and analyze if you can truly succeed via the franchise model.
I hope you found this article insightful.
