You have questions, we will give you direct answers with no smoke and mirrors. The most common question is “ How do I franchise my business and is it difficult, expensive and time consuming?” When you contact us you will have all these answers and more with a clear understanding of exactly what it will take to franchise your business (make sure to visit our Home Page to learn what it really means to franchise your business). The first thing we will do is talk with you to determine if franchising is even the right solution for your business.
Franchising is not for everyone, there are some advantages and there are some disadvantages to franchising. We'll go over all the steps to franchising and explain to you what you need to know about the magic franchise documents. For now, let's talk about the process involved in order to franchise your business.
We are a full service award-winning franchise development company that will turn your business into a franchise for a one-time flat fee. We have a proprietary franchise development process that makes franchising your business quick, easy and affordable. Every franchise program we build is custom to reflect the uniqueness of your business. We do not use templates or ask you to fill out questionnaires. NO gimmicks, NO hidden agendas and we do NOT make money off your success. We are the only ones in the industry recognized for ethics, integrity and transparency in the marketplace.
How to Franchise a Business
Franchising is a strategy that can help you to expand your business by way of other people operating your exact same business in other markets. A franchising strategy provides other people with the benefits of owning their own business, using your name and logo, system and know-how while benefiting from your experience and being provided with training and ongoing support. This allows you to grow and build your brand faster compared to expanding on your own. Read on to learn all about how to franchise a business so you can decide if franchising should be included in your growth plans.
What is a Franchise and Reasons for Creating Them
A franchise is operated by an independent business owner that has permission by you (under a contractual relationship) to operate the same type of business you created, offering the same services and products in the same manner as you and under your same name. This is different from other business expansion models, such as bringing on investors or organic growth. Organic growth, for example, is when you open other locations yourself, operating and managing these businesses on your own (usually a structure of managers, district and regional managers). Another example is a distributor, which is simply a relationship where you would just supply other businesses with products (basically a vendor to them) and where you have zero control over how the other business operates. Both of these examples are NOT a franchise.
Instead, a franchise is the result of a relationship between you (franchisor) and the independent business owner (franchisee), where the franchisee is fully responsible for all costs associated with starting and operating the business under a specific set of rules that are determined by you. This relationship governs the financial, legal and operational responsibilities between you and your franchisees. If this relationship is put together correctly, it also protects your trade secrets, spells out how you are shielded from liability and incorporates various deterrents and penalties intended to prevent franchisees from leaving you and becoming your competitor.
Characteristics of a Franchise
A franchise has a few hallmarks that identify it as a franchise relationship, which include:
- An initial franchise fee and ongoing royalty fees are paid by franchisees for the right to use your system, methods, techniques and intellectual property (such as trademarks, service marks and of course your trade secrets).
- The requirement to use, sell and offer only the products and services you specify.
- Specific vendor and supplier relationships. The franchisee is required to use only the vendors and suppliers (this includes service providers) that you specify. If franchisees want to use other vendors and suppliers, they must obtain your approval. This is in an effort to maintain consistency.
- Advertising and marketing materials, strategies and plans that you provide to the franchisee for them to use in their market. If franchisees want to use any other advertising and marketing materials they must obtain your approval. This is in an effort for you to control how your logo (brand) is being represented.
- A protected territory where they do not have to worry about competing against you or other franchisees. However, not all franchises provide protected territories and it will depend on your situation.
- A comprehensive training program you provide to the franchisee, its owners and manager.
- Assistance with build out. If a build out is required, then the franchisees must make all improvements to the appearance and function of its business according to your specifications.
Creating a Franchise with Your Business
Business owners like you choose to create a franchise program for many reasons. The primary reason is because of resources and talent, not to mention the difficulties that come when trying to operate several locations yourself. When franchising you are leveraging the resources (financial, time and talent) of others to start operating your business in other markets. When someone else operates a business using your name and logo in another market, and doing it the same way you have been doing it by following your magic formula, then slowly you become recognizable in various markets and your business starts to become a brand. Something harder to do on your own. Franchising just makes it quicker.
What You Need When Franchising a Business
The steps for how to create a franchise are fairly uniform regardless of the type of business you operate. Franchising is regulated by the Federal Trade Commission, which means it is federal. Once you are approved in your home state, you will be good to offer franchises throughout the entire United States (with a few exceptions). However, in order to franchise, the first step is that the relationship between you and the franchisee needs to be spelled out and presented in a specific manner. And this is where The Franchise Maker comes into the picture. You are not expected to navigate these waters on your own or even know how the relationship with your franchisees will be governed. Yep, we will: hold your hand and walk through it all, teach you how to franchise and what it really means, how to morph into your new role as a franchisor and share with you industry best practices (just to name a few). So, let’s look at what you are required to do and how all this information is supposed to be presented so you can start offering franchises.
The Package You are Required to Provide
The Federal Trade Commission regulates franchising so there is transparency between you and your franchisees. This is done to protect your future franchisees from being defrauded, lied to or misled by you). You are required to give all franchise prospects this package which is a document that regulates the relationship between you and your franchisees. This package is known as the Franchise Disclosure Document. To learn more about what is actually in this package see this article about the elements of a franchise disclosure document. The Franchise Maker will work closely with you to put together all the various pieces necessary for this package and most important put in the format necessary for a franchise attorney to review and file it.
Directions Once You Have the Franchise Disclosure Document
Learning how to franchise does not stop once you get the Franchise Disclosure Document (the magic package). Nope, now the real fun begins. While this Franchise Disclosure Document is important, in our humble opinion once you have it, you need to know what to do with it. When do you give it out, how do you give it out, how long does a prospective franchisee need to have it, how do I go about answering questions about it, how does it become a done deal, what if there are multiple people involved that wants to buy one franchise and so these are just a few of the situations you will need to know to handle. The Franchise Maker will prepare you for all these situations and some situations that may not even be on your radar because we believe the better prepared you are to handle various situations the more confidence a prospective franchisee will have in you.
Plan on How to Execute
Let’s talk about how to qualify prospective franchisees. While we will build you an attractive, realistic and affordable franchise program, it won’t mean anything if you do not take the time to qualify people who come your way.
Many things will need to be addressed when talking with prospective franchisees. Starting with:
- What questions do I ask?
- What things can I talk about, what are the things I cannot talk about?
- Do I have them fill out an application? What about credit checks?
- How do I make sure they have enough money?
Once you sign on a franchisee, then you enter into the execution phase. The most important part of franchising is your execution. Execution refers to not only what you are doing to help your franchisee with regards to securing space and build out (if applicable), but also what you are doing to help them prepare for your franchise training program. The franchise training program is yet another part of execution. Rest assured that as part of our franchise development program we will be working with you to define what is your franchise training program and through our proprietary processes, provide you with a road map that will enable you to identify what you will be doing each training day.
Realistic Growth Strategy
Knowing how to franchise with regard to execution is one thing, but you need to know what is a realistic growth strategy. Every business is different and depending on your concept will determine how slow or fast you should expand. Everyone would like to think that the minute they put out the word that they are franchising they will be overwhelmed with interest. And while that may be the case, just because you have overwhelming interest does not necessarily give you the green light to get as many franchises out there as you can. We believe that the biggest problem in franchising is fast growth. History has shown that brands that grow fast do not last. We will discover what is a realistic growth strategy for you and what is your bandwidth while working together. Your growth strategy will continue to evolve as you become more seasoned with franchising.
When You Are Ready to Franchise Your Business
There are several steps to franchise development. Below is a simple outline of the various steps necessary in order for you to start franchising immediately. As we begin to talk, you will realize that we have broken each step into easy, manageable phases. Our job is to make franchising your business QUICK & EASY for you. We will:
- Create an entity for the parent company. This is the company that will be in the business of offering franchises;
- Register your trademark (logo/design and word mark) with the United States Patent and Trademark Office;
- Structure your franchise system and put together the magic franchise documents (your Franchise Disclosure Document (also known as FDD) package that is required by the FTC so you can start offering franchises);
- Give this package to one of our franchise attorneys to review, make changes and file it with the proper state regulators;
- Provide you with instructions on funding your parent company;
- Introduce you to one of our accountants who will prepare audited financial statements. This is one of the required exhibits for the FDD package;
- Provide you with all the necessary resources and support materials you will need once approved to start franchising. This includes Franchise Operations and Pre-Opening Manuals necessary to present your operational procedures, systems and proprietary information in an organized fashion to your future franchisees; and
- Create and define your franchise applicant approval process, Discovery Day and provide you with ongoing assistance as you award franchises.
That is it. Do you need a large staff for the parent company? In a word: No (see our Learning Center article on the topic of hiring people when starting to franchise). We encourage you to start out slowly and expand as your franchise business dictates. We always recommend that you begin to offer franchises in your own State and surrounding States for the first year to keep things at an arms-length distance.
Working with The Franchise Maker
The Franchise Maker will guide you through the process of how to franchise your business and much more. When you talk with us, we will discuss your business to identify what makes it unique and its strengths and weaknesses, all of which will help determine if franchising your business actually makes sense. You might be interested to know that more often than not our President comes the conclusion that for some business owners, franchising does not make any sense. Yes you read that right, unlike any one you might find on the Internet when searching how to franchise your business, our President turns business owners away. We won’t just take anyone to franchise. In fact, our President says all the time that the biggest injustice is when someone desperate out there takes a business owner to franchise when it is not ready or it does not make sense (read this article in our Learning Center about scammers). When you call us, you will get straight forward answers!
The Franchise Maker will help you through the entire process of how to franchise a business. We have the experience and knowledge to help you decide if your business can grow through franchising. If franchising is right for your business, we provide you with our proprietary franchise development process. We will manage your entire franchise development process (no reverse delegation, that’s right we actually do the work) resulting in a comprehensive franchise program that is unique to your business. And most importantly, one that you understand so when you are asked questions later from a prospective franchisee you do not have the deer the headlights look.
With us, the franchising process is simple, fast, efficient and affordable. Your involvement is necessary and we will work at your pace but the amount of time we need from you is not intrusive (see this article on how long it takes to franchise). A few of the things that might make your business ripe for franchising include:
- Does your business provide a unique service and/or product?
- Length of time your business has been in operation?
- Is there a demand for what you offer?
- Do you have a well-rounded business rather than just a product you want to get out there?
- Have you created a magic formula of how to perform tasks?
If you can answer "yes" to these questions, your business might be ready for franchising and we encourage you to Contact Us.
So what does it cost to franchise my business? Not as much as you think, we are sensitive to your needs to minimize costs and would rather see you spend money on advertising and marketing your franchise when we are finished. Our fees are minimal and all costs to franchise your business are a FLAT FEE. Compensation for our services are broken down into different phases and you can choose to pay when each phase is completed. This is a Pay-As-You-Go program where you do not have to commit to a large sum up front. We will be happy to explain this to you in greater detail when you contact us. Our Pay-As-You-Go program gives clients added confidence in our services since the risk is shifted on us to perform for YOU.