So you have been operating your business for some time now, survived COVID and doing great. Now you are ready for the next step, want to grow your business and franchise it. Perhaps you have wondered “how can I franchise my business in Hawaii” and simply not sure where to begin. You look on the Internet and find all kinds of things some of which are not even relevant to franchising leaving you dazed and confused. Well, your search is over. We will cover some essential factors you need to take into account when thinking about the franchising your business, what it takes to get approved and franchise in Hawaii.
Evaluate Your Business
The first step in assessing if your business is suitable for franchising is to look at your proof of concept. How long have you been running your business and why in your opinion is it a success? Identify what makes your business unique and draws people to you (take a look at “Questions to Ask Before You Franchise Your Business“). This could be a unique product, exceptional service, a new way of doing something common or a distinctive approach to meeting a person’s needs. When we talk be prepared to share examples that highlight your business’s strengths and unique selling points.
Consider the culture have created within your business. What are you values and your philosophy when running operations? A strong and positive company culture can be a significant asset when expanding through franchising. Potential franchisees will be attracted to a brand that not only offers an easy to follow business model but also aligns with their own values.
Is Your Business Scalable?
What is the type of business you operate and the nature of your business. Is it a professional service that requires licensing (read more about “Can My Business be Franchised if it Requires a License“), a mobile service or a business that requires a physical location? If your business requires a physical location think about what is the smallest footprint (square footage) it can be operated out of and if it requires a lot of build out. For example if you are a retail store ask yourself if you really need 3,000 square feet of space or if it can be operated out of a smaller 1,200 square foot location.
Let’s touch on flexibility. How flexible is your business model is determined on the what type of business you operate. For example if you operate a business that performs services onsite, perhaps someone can start the business out of their home then later morph into a small office, warehouse or industrial space (take a look at “Franchising a Home Based Business“). We will have to touch on overhead costs, maybe the biggest overhead cost are the vehicles and equipment you use when performing services. Flexibility in your business can be a key factor in determining how attractive your franchise program will be to others.
How Easily Can Your Business Be Duplicated
Evaluate whether your business can be easily duplicated. Is it labor-intensive or do you need a full staff? Are there things that you make, put together or have to produce in order to sell it. For example if are you selling soap that requires you have a small production area, then will be seeking franchisees who are not afraid of production in addition to sales. And that is okay because there are lots of franchises of that same nature out there already (take for example screen printing shops).
The ease and efficiency of how you operate your business must also be taken into consideration (read more about “How to Duplicate Your Business“). If you are like most business owners you have figured out the short-cuts, the best way to be efficient and save time. While not formal, you have probably created certain methods and laid out specific processes that might be a combination of common tasks or a super unique way you go about making sure every aspect of the business runs smoothly. These methods, processes and ways in which you run your business must be trainable. And if you are worried about teaching these strategies with a franchisee afraid that you are sharing trade secrets, worry no more. In the franchise program we build for you there will be lots of protections against a franchisee from stealing what you teach them and using it not only to compete against you but from them in any other business capacity. The question is how easy it is to teach and train so operations can be duplicated by a franchisee.
Are You Making Money?
If you are like most business owners you have figured out a way to streamline costs. Streamlined operations are crucial for controlling costs. After all expenses and overhead is paid ask yourself is your business making money (you can read up on if there a set amount of money or profit you need to make before franchising your business). The financial health of your business goes way beyond just turning a profit, it involves constant attention to controlling costs. Think about what steps you have taken to manage material costs, labor costs, advertising and marketing costs.
Speaking of costs, let’s not forget about overhead costs. This goes to the previous discussion above about flexibility. And even if there is not much flexibility with your business model guaranteed there are still some ways to control overhead. For example if your business requires a storefront, you might be good with a second generation space rather than a new build out. How about the option of sharing a space with a business already in operation or franchisees jumping into a shared space? Both of which would help minimize overhead costs.
While it is impossible to guarantee the type of profit franchisees may experience or amount of revenues they can generate (because there are way too variables), the idea is if they operate their business with the same attention to detail when controlling costs as taught by you then they too should make money. Is it your savvy and business acumen that got you where you are now so sharing that with someone who is willing to invest their time and resources into your business may pay off in dividends.
What are the Requirements to Franchise My Business in Hawaii?
In order to franchise your business in Hawaii, a key requirement is to have a well-crafted Franchise Disclosure Document (FDD) that not only is specific to your business but also adhere to all the federal and state legal requirements. This document (really it is a packet) outlines the entire relationship between you and the franchisees (learn more specifics about the elements of a franchise disclosure document). It details the structure of your entire franchise program, outlines franchisees responsibilities, your obligations to them, the deliverables you provide and of course of written well affords you protections for your intellectual property and trade secrets.
Steps to Franchise Your Business in Hawaii
We will begin by protecting your logo and business name through trademarking. Establishing a franchising company is the next crucial step because this will be the company that will be in the business of franchising keeping your current company protected. Then we will dive into what it takes to start your business, costs, build-out, inventory necessary to have on hand, what your training program will look like, if you are providing a territory, how long the relationship will be and what fees the franchisee will be responsible for during their time with you. Rest assured we will walk you through all the steps to franchise, holding your hand every step of the way and sharing with you best practices in franchising.
But wait Johnny there’s more. Yep all the nitty gritty details such as a non-compete, indemnification, reasons for terminating the relationship, what happens if there is a dispute and how that is handled in addition to obligations of the franchisee once the relationship ends. Are you expected to have an idea about any of this, nope. While developing your franchise structure we will explain, coach and mentor you through it all ultimately putting together a franchise program that is specific to you. Templates, we do not use them (see why using templates is bad). By the time we are done you will not only understand your franchise program but will be able to answer questions about it.
Once your franchise program is well defined, then your FDD will go to one of our franchise attorneys for review (not just any attorney but one of our franchise attorneys take a look at what to be aware of when working with an attorney to franchise a business). From there the franchise attorney will make edits to ensure not only are you well protected but that also you comply with federal franchise laws and also Hawaii franchising laws. In other words, the franchise attorney will scrutinize the franchise program we have put together for your benefit. Then it is all sent off to Hawaii.
Getting Approved in Hawaii
Franchising in Hawaii is a bit of an arduous process because Hawaii is a franchise registration state and requires Hawaii approval. This means the approval process entails a franchise attorney filing your FDD (along a fee) with the state of Hawaii and from there it is assigned to a state examiner. A state examiner will put their eyes on your FDD to ensure compliance not only with federal regulations but also with Hawaii franchise requirements which is a bit more stricter than the federal guidelines.
Yep, the examiner will read your FDD word-for-word and in most cases will ask for changes that are specific to Hawaii in the form of a response letter. Some the changes may be minor and some of the changes the examiner asks for may surprise you and could be a game changer. Either way the franchise attorney will have to respond to the examiner with immediate compliance or an argument challenging the changes hoping to sway the examiner. If you choose not to comply with the examiner’s changes that are asked for or agreed upon, then you simply won’t be approved. And yes the stories are true, there are instances where Hawaii will deny your franchise registration. Lucky for you we have never had a denial in any of the franchise registration states (see this article for a list of all the “Franchise Registration States“). Once approved, the examiner will issue a permit with approval details and you will be good to offer franchises in Hawaii and all the other non-registration states.
Understanding the importance of getting approval is crucial and timing is the wild card because it will depend on how quick the examiners move, volume of filings, time of year and other factors. If you are based out of Hawaii not only is it required that you have to get approval in Hawaii before you can do offer franchises, it also legitimizes your franchise offering within Hawaii and serves as a prerequisite for expansion into other states. Bottom line, if you are based in Hawaii the approval from Hawaii regulatory authorities provides the green light for for you to start offering franchises not just in your home state but all over the United States (with the exception of the other Registration States which will require same process).
Identify Your Expectations
While there are many benefits to franchising, consider what you expect to achieve through franchising and, most importantly, what you really want out of franchising. If you think franchising will immediately get you out of the day to day business operations, think again. That will take some time. Consider your growth plans, ideal franchisee candidates, growth rate and ultimately your end game (take a look at “What’s Your End Game Franchising May Play a Role”). Whether it is building a legacy, selling the franchise system, going public or another aspiration clarifying your end game is important for identifying your strategic plan moving forward.
Take a minute to really think about who is your ideal candidate to operate your business. Does that person need prior industry experience or can you take anyone from off the street and turn them into a business owner? As far as growth, how many franchises do you think you are going to award each year? And let’s be realistic, remember awarding franchises does not just mean collecting fees and signatures. Its about planning, onboarding and training franchisees every aspect of your business. And that takes time.
So if the idea of franchising your Hawaii business excites you and you have identified some of the key factors above, the it might be time to franchise. Give us a call at 1-877-615-5177 and we will be happy to discuss franchising with you and if it makes sense we will further explain how to franchise so we can turn your business into a flourishing franchise system.
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