Top 5 Things You Should Know Before Franchising Your Business

04/05/2018 17:00 | Start a business

Tips for franchising your business

Franchising your business is an excellent way for you to grow. It allows you to take your successful business and build it quickly without the enormous levels of capital investment that you'd need access to if you were to expand alone.

But franchising isnt the right thing for every business. Your desire to franchise your business and the fact that it is successful is no guarantee that it will become one of the most profitable franchises. Before you go down the route of franchising your business, here are five things you should consider:

Standardise your business processes

Your business is your baby, and you know it inside out. But if you want to build one of the most profitable franchises you need to help your franchisees run their businesses as you would yours.

One of the essential parts of evolving your successful business into a profitable franchise business model is to make sure that you document all of your systems and processes. This will then form your operations manual which will provide your franchisees with the crucial details that are needed to provide a consistent experience for customers.

Documenting every step of your business processes is not only one of your fundamental obligations set out in the franchise agreement but also enables franchisees to replicate your business effectively. And it is this replication that is an integral part of franchising. By standardising your business processes, you will give your franchisees the best chance of succeeding.

Recruit your franchisees carefully.

Your franchisees are your greatest asset, so you need to make sure you hire the right ones. Your success depends on their ability to run a lucrative business, so you need to have a robust recruitment process in place.

For the relationship between you and your franchisees to be successful, you need to have confidence that they will fit in with the culture youve developed. However, from a practical perspective, you need also to be confident that prospective franchisees have adequate funding, the relevant experience and share your long-term goals. Here are some fundamental questions that you should ask during the interview process:

  • Why have you chosen this franchise?
  • How much capital do you have to invest and what is the source of funding?
  • Do you have experience in the industry?
  • Are you willing to work hard?
  • What are your long-term goals?

Significant time, effort and money should be invested into getting the recruitment process as robust and as thorough as possible. Its a necessary expense that comes with franchising your business that will save you problems in the future and mitigates the risks of losing money further down the line.

3. Don't skimp on training.

A quality training programme benefits you as much as your franchisees.

For your franchisees, they get the benefit of learning all they need to successfully run their business and get their new franchise off to the best possible start. For you, providing an active training programme will lead to your franchisees making fewer mistakes and therefore reducing the time they need to spend fixing errors. Less time wasted equates to higher productivity. This can result in your franchisees owning and operating the most profitable franchises, which is more lucrative for you too.

And its not just the initial training that you need to get right. The role of ongoing training and support should not be underestimated. Youll need to invest in continuous support for your franchisees so that they can develop and evolve in line with your franchise. Failure to take this element of your business seriously and you risk your franchisees becoming ineffective, dissatisfied and uninterested which will also have a knock-on effect on your ability to recruit new franchisees.

Protect your brand

You will have worked hard to build up your business, and now you have a recognisable brand and strong reputation. Your brand image is your customers perception of you and so must continually be reinforced and protected. The only way to effectively achieve this is to ensure that your franchisees are provided with comprehensive training, have access to a detailed operations manual, and receive regular marketing support.

Your customers will expect what your brand will provide them with and will demand the same services or products regardless of the location they visit. Its this consistency that builds trust in your brand, and so it's crucial to the overall success of your business that your franchisees understand the importance of uniformity.

It's for this reason that you must be prepared to protect your brand come what may. If you have franchisees that are always in breach of the franchise agreement, then you must be seen to reprimand them. If you choose to ignore any breaches or don't deal with non-compliant franchisees effectively, you're sending out a message that the protection of your brand isn't your priority. As your franchisees will have invested in your franchise based on the strength of your brand, this can cause them concern that their businesses are being devalued.

Draw up a franchise agreement

You need to consult a specialist franchise solicitor when you begin to develop your franchise agreement. It can be a complicated document to draw up, and you want to avoid any future issues or conflict by making sure that the terms and conditions of the agreement are clear.

The franchise agreement is legally binding and acts as the foundation for your relationship with your franchisees. For this reason, it needs to precisely detail elements of your franchise business including fees and royalties, expected performance standards, costs, roles and responsibilities, as well as training and support.

The restrictions that should be adhered to once the franchise term has ended are as important as the conditions that are in place during the franchise contract. How you deal with franchisees that aren't performing well or just want to sell on their business, is critical to the longevity and success of your franchise.

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