When you decide to franchise your business, you are doing much more than creating a Franchise Disclosure Document (FDD). You are developing an entirely new franchise program based on a business that you have poured energy into and spent years building.
Every business is different. How you operate, what you charge customers, how you train people, the support someone needs to duplicate your business and even what makes your business successful can be very different from another company — even one in the same industry.
So why would the franchise program used to expand your business look just like someone else’s?
It shouldn’t.
Franchise development should start with understanding your business and then developing a franchise program around it. The FDD and other franchise documents should ultimately reflect the franchise program that was developed — not be the starting point for deciding what your franchise should look like.
Your Franchise Program Should Start With Your Business
Before decisions can be made about your franchise, someone needs to understand how your business actually works.
How do you make money? What does someone need to know to duplicate your business? What kind of training will a franchisee need? What support will you realistically provide? Are customers coming to a physical location, or are you providing services at a customer’s home or business? Does geography affect how the business operates? Are there products, equipment, suppliers or licensing requirements that need to be considered?
Those aren’t questions that should have predetermined answers.
When we develop a franchise at The Franchise Maker, we start by learning about the business. That information helps us determine if your business is franchisable (take a look at this article titled “How to Know if My Business is Franchisable“) and how the franchise program should be structured rather than trying to make the business fit a structure that has already been created.
This is an important distinction because collecting information about a business is not the same thing as developing a franchise program for that business.
What actually Needs to Be Customized When Developing a Franchise?
There are many decisions that have to be made before you are ready to offer franchises.
Franchise Fees and Royalties
How much should the initial franchise fee be? How should royalties be structured? Should they be a percentage of sales, a flat amount or structured another way?
Those decisions should make sense for the economics of the particular business and the franchise relationship being created.
Franchise Territories
Are you going to be providing protected territories? You are not required to give a territory but it is important you understand the pros and cons of franchise territories (take a look at “What is The Purpose of Franchise Territories“). Different types of businesses require looking at a territory through a different set of lenses. For example a service business serving customers within a geographic area is very different from a brick and mortar business where customers actually go to a physical location.
The logic of how a territory is put together is very important. It should be realistic and modeled off what you currently do when operating your business. Whether or not you provide territories for your franchises has to do with a mix of your philosophy and reality.
Length of the Franchise Term
How long will be the term of your franchise? Three years? Five years? Seven years? Ten years? Fifteen years? Longer? It is not forever.
The answer shouldn’t simply be whatever term happens to appear in other franchise agreements. The length of your franchise term should make sense for your type of business, the franchisee’s initial investment, how long it may take to establish the business, how long will it take for the franchisee to break even and other important factors you need to take into consideration as your franchise system grows.
You also need to think about what happens when that initial term expires. Will the franchisee have the opportunity to renew? If so, under what conditions and renewal is for how long?
The franchise term is another really good example of a decision that should be made as part of developing your franchise program, rather than accepting a predetermined or what may be seen as a “common” term. Because that’s what happens using a template.
Training and Ongoing Support
What does a franchisee really need to learn before opening your business in their market? How long should training last? What materials are you going to give them and what materials are you required to give them. What happens after the franchisee opens for operation?
The answers depend upon the business being franchised and every business is different.
A complicated service business may require very different on boarding, training and support than a retail concept. The goal isn’t to promise as much training and ongoing support as possible. It is to determine what franchisees actually need and what you can realistically provide.
Protecting Your Trade Secrets
Part of franchising your business means teaching someone else how you do what you do. That can include specific techniques, methods, processes and other information you have developed over the years that you may consider confidential or proprietary.
Naturally, that makes you nervous. You may be thinking, “If I teach franchisees everything I know, what prevents someone from taking that information and using it somewhere else?”
Protecting your trade secrets and confidential information is essential when developing your franchise program coupled with a non-compete. However in most states non-competes are hard to enforce, so now what? That is why when we build your franchise program we include language in the FDD that protects you far beyond a non-compete (take a look at “A Custom Approach to Franchising Your Business“).
The goal is to give franchisees the knowledge they need to duplicate your business while also building appropriate protections into the franchise relationship for the confidential information, systems and methods you are sharing.
That is another reason why your franchise program needs to be developed around your business with a skilled franchise developer, rather than simply pulled from a worksheet that goes into a template.
Gathering Information is Not the Same as Developing a Franchise
Unlike other companies out there we do not use questionnaires. Nope, we are old school and actually talk with you one-on-one about your business. We do not need to know anything proprietary but we do bank the hours rolling up our sleeves and immerse ourselves into your business. Don’t believe it is possible, just take a look for yourself at what our clients have to say.
The same applies to all the decisions we have to make about your franchise program (royalties, training, term, territory, franchisee responsibilities, your responsibilities to franchisee, your deliverables, and the list goes on). We actually talk with you, engage in conversation, provide you guidance and best practices when tackling such topics.
Quick and Affordable Shouldn’t Mean Cookie-Cutter
We describe our franchise development process as Quick, Easy & Affordable. Quick does NOT mean rushed, affordable does NOT mean standardized and easy does NOT mean there isn’t a lot of thought going into developing your franchise.
Our President, personally works with you to put your franchise program together. If you are not talking with the person who will actually be putting your franchise program together, then you are talking with the wrong person. With more than 35 years of franchise experience, one thing our President has learned is that no two businesses are exactly alike, so no two franchise programs should be exactly alike either.
An organized and experienced development process can eliminate unnecessary delays and expense without eliminating the thinking that goes into developing your franchise.
Develop a Franchise Program That Fits Your Business
If you are thinking about franchising your business, don’t be afraid to ask how your franchise program will be built, who you will be working with and how much of your time will be needed. You should understand who is developing it, how the important decisions will be made and whether the finished franchise program will truly reflect the business you have built.
We have been helping business owners franchise their businesses since 2005. Every franchise program is different and while every FDD has to have certain information in there, every FDD is different because it is based on the individual business we are franchising. Our proprietary process is designed to make franchising easy for you so that at the end of the process you are self-sufficient without having to depend on anyone for your franchising efforts.
If you are considering franchising your business and would like to learn more about how our franchise development process works, call us at 1-877-615-5177 to chat your business.
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- Do I Need a Local Franchise Development Company
- How is The Franchise Fee Determined
- Franchise Fee vs Total Investment
- What are Average Royalty Fees
- See the Steps to Franchise Your Business
