Do you own a small business that has taken off? Franchising your small business is a great way to grow fast. This is the best way to spread your business at a fast pace, earning more money. Before you think about franchising, you need to sort of a number of details.
If your small business has been successful thus far, you may be ready for the next big step. It's important to approach this effectively. According to the International Franchise Association, 105 companies began franchising in 2008. By the end of 2009, more than 40% had not reported their first sale. It is very important that you approach the market wisely.
If you think that franchising may be for you, it's time to explore your options.
- Is Your Business Ready? Your current location(s) will need to be turning a profit. Your business needs to be something that can be replicated. If your business is successful due to your personal touch, it may not do well outside your personal control and presence.
- Look at Your Finances: Your business is most likely successful, now it's a matter of making it successful in other locations. It is usually beneficial to have a few successful stores before attempting to franchise. If your locations are all profitable, this is a great sign.
- Look at the Market: You may believe in your business, and that's great! It's important to stand behind your brand, but how will it do across the country? Research the market, focusing on consumer demand. What does this data look like outside of your current city?
- Prepare Yourself: There will be many changes ahead. Creating a franchise means you will need to take on a new set of responsibilities.
- Create Paperwork and Register: You will need to complete legal paperwork and wait for approval. You may be required to provide more information before your application is approved.
- Hiring: You will more than likely hire a few people to help strictly with franchisee details.
- Selling: You will now need to convince franchisees to buy your business. This can be a challenge, you need to show that your business is a great investment.
- Support: At this point, you will have entered the world of franchising. It is important to provide support, such as training programs. This increases quality control. You want to be consistent.
Be conscious of these decisions while making your franchise plan:
- Franchisee fee, what royalty will you ask for?
- The terms of your franchise agreement
- What geographic area will you be offering franchises?
- The training program that will be implemented
- Where the products and equipment will come from. Will they need to purchase these for you?
- What experience is required from your franchisees?
- How will you market your business?
Know Your Business Like the Back of Your Hand
- It is crucial that you know your business inside and outside. While running your business on a small scale, you may have gone with the flow.
- Franchisees will need to know precise details. Every step needs to be properly outlined and provided. This will include important steps such as ordering inventory, book-keeping, training, etc.
Educate Yourself with Legal Issues
- It is important to pay close attention to legal details. This will include aspects such as financial performance. The International Franchise Association is a great resource to help with the legal details. They will provide numerous resources so that you can be successful.
Know How Your Business Will Grow
- There are certain aspects that you can predict when planning your business. With that being said, you should have an idea regarding your expected growth. How do you want to grow?
- Include these plans in your business model. Do you want to grow your business within your current country? Perhaps you would like to plan for international growth. This is an important part of your overall plan.
Screening Prospective Franchisees
- This is a VERY important step. Your franchisees will be representing your business. You have worked very hard to get your business where it is today, you'll want people who respect that. You need to look for people that will represent you and your brand appropriately.
- There are very important items that these franchisees would need to submit (financial information and documents), but their personalities can also tell you a lot. It's great to have enthusiastic applicants, but they need to have substance as well.
- Many new franchisees make the mistake of selling to anyone. They're trying to hit the market with a bang, but this can be very harmful to your business.
- There will need to be consistencies across each location; hiring, training, etc. However, there should also be some freedom. It's a matter of choosing the RIGHT restrictions.
- These franchisees will be small business owners as well, sometimes it's good to put trust in them. It's important to incorporate their judgment, allowing for potential business opportunities.
- Each franchise will differ in terms of restrictions; you need to do what is best for your business. Just remember that being too rigid, can leave your potential franchisee pool too small.
- As your business takes off in several locations, you will begin to step back a bit. You will not be present for daily business, so you should get to know your franchisees. If you have a good work relationship, there will more than likely be good communication.
- It is important that you are able to support these business owners. Of course they will be working for your brand, but the business will be their livelihood as well. It's important to have respect for one another.
If your business has taken off, there may be room for expansion. You have worked hard towards your business so take the next step. Before you enter the world of franchises, make sure you have done all your homework. Be confident in your business, while researching the current market. Take all the correct steps and you'll be on your way to success.
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