What to Look for in a Franchise Development Company

Choosing a franchise development company is one of the most important decisions you will make when franchising your business. But before you choose one, you need to know what to look for.

Not every company offering franchise development services does the same thing. Some focus primarily on developing franchise programs, like The Franchise Maker. Others may also market and sell franchises acting as a franchise broker while touting a variety of other franchise-related services all with the hidden agenda of trapping you into long term commitments.

Before you hire anyone, you should understand who will actually develop your franchise program, how it will be developed, what experience that person has and how the company makes money.

Those distinctions can tell you much more than the number of franchises a company says it has sold, the number of brands it displays on its website or the combined years of experience of everyone on its staff.

Identify Who You Are Really Talking To

First things first, you need to know who you are talking with about franchising your business. There is a lot of title confusion out there. You will hear companies call themselves: “franchise advisers”, “franchise consultants”, “franchise coaches” and even “franchise sales organizations”. This is a sneaky way for these companies to camouflage the fact that they are really “franchise brokers” whose main function is to market and sell franchises (for a further explanation you can read “Know the Difference Between a Franchise Advisor, Consultant & Broker?”).

While selling franchises has become a lucrative industry and there are more franchise brokers than there are trees in the Pacific Northwest, selling franchises is completely different from creating or building franchises. Think about it, it’s like asking a real estate agent to build a home for you (more than likely you will be hiring a general contractor to build your home). Over the years franchise brokers have realized there is a negative connotation with identifying themselves as brokers so they have come up with a creative way to identify themselves differently. And what about those who are legitimate consultants and advisors? In many industries, a consultant or advisor is an expert who charges a fee for coaching a business owner or providing advice in a particular field.

Selling franchises and developing programs to turn a business into a franchise are two completely different skills. Before hiring a company, find out whether franchise development is actually its primary business or simply one of several franchise-related services it offers.

Find Out Who Will Develop Your Franchise and How

One of the most important questions you can ask is surprisingly simple: Who is actually going to do the work to develop my franchise program?

You may initially speak with a salesperson or account representative. But is that the person who will actually be determining how your franchise program should be structured? Who is beind the curtain? Will you be working directly with the person making those decisions and writing your FDD (answers to “Questions About the FDD“)?

This is where you need to pay attention at the claims about experience. A company may advertise the combined years of experience of its entire staff. There is nothing necessarily wrong with that number, but it doesn’t tell you how much franchise development experience the person who will be working on YOUR franchise program actually has under his or her belt.

Ask how long that person has been actually been writing and putting together franchise programs and what role they will have in developing your franchise program and Franchise Disclosure Document (this is a complicated document, take a look at “The Elements of a Franchise Disclosure Document“).

Then find out how your franchise will be developed.

Your business isn’t identical to someone else’s, so your franchise program shouldn’t automatically look like someone else’s either. Ask how the person you will be working with how will he or she learn about your business and how are important decisions involving your franchise fee, royalties, territory, training, support, franchise term and other parts of the franchise relationship made (take a look at “Why Franchise Development Isn’t a Template Process“).

Will someone actually discuss those issues with you one-on-one, bank the hours, provide guidance and help determine what makes sense for your particular business? Ask that person how many one-one-one hours will you have with the person who will be putting together your franchise program and writing your FDD.

Simply collecting information about a business is not the same thing as developing a franchise program for that business.

At The Franchise Maker, Our President personally writes and puts together every franchise program. When you are talking with him about your business, you are talking with the person who will actually be developing your franchise.

Don’t Confuse Franchise Marketing and Sales with Franchise Development

You may come across companies promoting the number of franchises they have helped market and sell or displaying an impressive collection of recognizable franchise logos on their websites.

Those things can certainly look impressive. But you need to understand what they are actually measuring?

Franchise sales volume tells you how many franchises an organization has helped market and sell. It does not, by itself, tell you how well a franchise system was developed OR if any of those franchise systems have faced legal issues or been sued.

Marketing and selling franchises generally occurs AFTER the franchise program has been developed. Developing the franchise program involves a deep understanding of the business and making decisions about the franchise structure that franchisees will ultimately operate under.

The same applies to the logos you see displayed on a company’s website. Don’t automatically assume the company developed or created all of those franchise systems from the ground up. More than likely the company you are talking with about franchise development may have sold franchises for that brand, recruited franchisees, provided consulting services or performed some other service. As a side note, the comprehensive list of clients on The Franchise Maker’s website are businesses we have taken to franchise from start-to-finish!

Ask what the company actually did for those brands.

Large sales numbers and a long list of recognizable brands demonstrate experience franchise marketing and sales. But franchise marketing and sales experience and franchise development experience are two completely different measurements. Don’t be fooled.

What matters to you is whether the company, and particularly the person working with you, has the experience to develop your a comprehensive franchise program that is fair and protects the various aspects of your business that are important to you.

Understand How the Franchise Development Company Makes Money

Before hiring a franchise development company, understand how they make money and get paid.

Does the company charge you a flat fee to develop your franchise?
Do they also want to market and sell franchises for you?
Do they receive a commission when you sell a franchises?
Do they want equity in your company or a percentage of future royalties?
If you jump in bed with them is there a long-term commitment?
Will you be required to use them or a sister company as a vendor for all your franchising needs?

Different companies can have different business models. That doesn’t automatically make one model right and another wrong. But you should understand the financial relationship and the handcuffs that may come with it BEFORE making your decision.

At The Franchise Maker, our business is only franchise development. We charge a flat fee to put your franchise program together and walk you through all the steps to franchise. We do NOT market or sell franchises, act as a franchise broker, receive commissions from your franchise sales, take a percentage of your royalties or tie you long term commitments. Our success is measured by creating a franchise system that protects your business, keeps you out of lawsuits and prepares you for long-term growth.

We deliberately keep franchise development separate from franchise marketing and sales. Our job is to help you develop a franchise program that makes sense for your business — not to earn additional money based on how many franchises you eventually sell.

Do Your Homework and Ask the Right Questions

Before hiring a franchise development company, do your diligence.

How long has the company been in the business developing franchises?
Who owns the company?
Does the company have an established track record in making franchises?
Have you researched that company and the owner’s name using words like: scam, fraud, racketeering, complaints, banned, ripoff, litigation, class action or lawsuit?
Has the company or anyone in the company ever been banned from performing franchise activities in any state in the past?

Then ask questions that go beyond price and how quickly your franchise can be completed.

Find out who will personally develop your franchise, what direct franchise development experience that person has, how will your franchise program will be customized around your business and whether you will be working directly with the person you are talking to who will help you make decisions.

If a company displays recognizable franchise brands, ask what it actually did for those brands. If they promote a large number of franchises sold, understand whether that number represents experience in putting together franchise programs, franchise marketing or sales activities.

And don’t forget to ask how the company gets paid. Does it only charge for franchise development or do they also offer “additional” services that entitles them to receive commissions, royalties, equity, kickbacks or other type of compensation?

Don’t be afraid to ask for references either. Speaking with business owners who have actually gone through the franchise development process to turn their business into a franchise can tell you a lot about what your own experience may be for you.

At The Franchise Maker, we have a clean record and have never been accused of fraud, never been sued and never been banned from performing franchise services anywhere. We do not require any long term commitments, will never pressure you to sell franchises to your count up, do not make any commissions or royalties and do not take any equity of your business. You will find we are the ONLY franchise development company recognized by the Better Business Bureau for our ethics, honesty and integrity (take a look at the About Us page on our website).

You spent years building your business. It makes sense to look behind the claims and understand who you are hiring, what they will actually do and who will personally be responsible for developing your franchise.

Choose Experience That Fits What You Need

There are many companies in the franchise industry, and they don’t all provide the same services or approach franchise development the same way.

If your objective is to turn your current business into a franchise, look beyond sales numbers, logos and broad claims about experience. Find out who will actually develop your franchise, how your program will be developed and whether the company has a financial interest in selling franchises after the development work is finished.

At The Franchise Maker, we have been doing franchise development services and helping business owners turn their business into a franchise since 2005. Our President works directly with you to develop every franchise program, teaching you, mentoring you, guiding you and providing you with best practices so when you are done you will be self-sufficient.

Our focus is franchise development, not selling or marketing franchises.

If you’re thinking about franchising your business, call us directly at 1-877-615-5177 to discuss your business and learn how our franchise development process works.

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What to Look for in a Franchise Development Company