FDS Northern: Franchising The Right Way

How do you go about using your business to set up a fully functioning and, most importantly, saleable franchise system? Tony Urwin explains

So, you've been running your business for a while - long enough to prove that it works well and is profitable. It's all going well and you've decided that franchising is an option you want to consider. What do you do next?

Having established that your franchise has sufficient differentiation from other market offerings, your next step should be to seek the help of an experienced and reputable franchise consultant. They will spend time gathering information from you about your business in order to assess the viability and profitability of the proposed franchise offering. Assuming that the figures all add up and your consultant is assured that the concept will franchise well, work can begin on setting up your franchise system.

For your fee to the franchise consultant, you should expect to receive:

  • an initial evaluation of your business and whether franchising is tenable;
  • a clear outline of the development plan for your operation;
  • a prospectus to be used to market your business to franchisees in the initial stages;
  • a Franchise Information Memorandum tailored for your business, which will assist franchisees when seeking funding from their bank;
  • an operations manual detailing the day-to-day workings of your business for your new franchisees;
  • guidance concerning your legal agreement and recruitment of franchisees;
  • ongoing assistance and advice.

You may wonder whether this assistance is necessary - can't you just come up with your own franchise plan and write your own literature? After all, who knows your business better than you?

Well, true enough - you know your business best. But you should view developing a franchise as opening a whole new business - your new job will be that of a franchisor, and the chances are you have no previous experience of this. You will know how to avoid the pitfalls that may arise in your original line of business, but will have no idea of the perils that can lie in wait for the uninformed franchisor.

Sure, you could write your own literature, but are you 100 per cent confident that you know exactly what information to include and how to present it so that you portray your company as a professional and reputable business that franchisees would want to buy into? In the professional franchise marketplace, presentation is crucial in order to build your brand effectively. Obviously it is vital that under all the gloss you have a solid, sturdy franchise model, but the best business in the world won't sell itself - you need to put in the effort to make it look attractive.

The main reason that someone chooses to go down the franchising route is the benefit of working under the umbrella of an established and well respected brand. You need to make sure that all your intellectual property rights - for example your logo, business name and trademarks - are registered to you and are available for use. Your franchise consultant will be able to advise you on this, and other crucial elements of the franchising plan.

Once your system is in place, the next major challenge you face is recruiting your franchisees. Again, you should be given some assistance and guidance from your franchise consultant as to how to proceed. You will no doubt have started marketing your franchise, but what sort of person are you looking for?

Depending on your business, you will have specific, relevant requirements, but in general a few characteristics to look for in prospective franchisees are:

  • determination and the drive to succeed;
  • enthusiasm for the market sector you operate in;
  • keenness and speed of learning;
  • willingness to work with you and follow your business principles and the guidelines set out by you in the Operations Manual;
  • attention to customer service and sales and management skills.

Having set up your franchise system and recruited your first franchisees, you should be well on your way to success - provided that you have taken the time and invested your resources into creating a quality franchise opportunity!