Franchised business networks touch many different industries from retail and food to home services and business-to-business. Some are owner/operator businesses while others occupy vast premises with hundreds of staff and thousands of stock lines.
What is appropriate for one industry is not appropriate for another; what works for one business may not work for another. That means it is extremely important to take professional advice to create a workable and sustainable business model from the beginning.
Before you take money from someone else for a franchise, you need to invest some of your own money into developing a robust and sustainable franchise format.
A pilot operation is essential to test systems, marketing, supply chains, service, pricing, margins, seasonality and all sorts of other essential elements. This will enable you to find what works and what doesn’t, and to document the systems as they are developed. This is what future franchisees will be expecting to pay you for.
A pilot operation is essential to test systems, marketing, supply chains, service, pricing, margins, seasonality and all sorts of other essential elements. This will enable you to find what works and what doesn’t, and to document the systems as they are developed. This is what future franchisees will be expecting to pay you for.
So is your business franchiseable? To find this out, you’ll need to undertake a franchise feasibility assessment. This is a structured approach that covers all the key components which determine how a workable franchise would be configured. The purpose of the feasibility assessment is to build a franchise model that is scalable, replicable, profitable, viable and sustainable for the stakeholders – franchisor and franchisees alike. This creates the platform from which you can develop your franchise system.
Once an informed decision can be made to proceed, it may then be necessary to re-model aspects of the pilot business so it can be configured into a franchiseable business, and then to test and measure the changes to ensure they achieve the desired results.
The next stage is to prepare the various documents that you and your franchisees will need to run successful clones of your pilot operation in new locations. All documentation should be compliant with the Code of Practice and Code of Ethics of the Franchise Association right from the start which will help reassure potential franchisees.
These document the systems and processes by which your franchise operates. A manual set may include franchisee and franchisor manuals, operating manuals, training manuals, health and safety manuals and more. They form an integral part of the franchise system and a major part of the Intellectual Property which the franchisee is going to use.
Your franchise will need a brand that will encapsulate the business, and marketing systems that will attract customers for franchisees. The brand, logos, website addresses in all their variations and other items also form a part of the new franchisor’s IP and need to be registered and secured prior to franchising.
Franchisees must have access to proper marketing material and clear guidelines on brand values and usage. Failure to do so may lead to your losing control of your brand.
You will need to be able to attract, inform, evaluate and appoint suitable people as franchisees. This will require advertising in a variety of media, the creation of information packs and the preparation of a full and detailed Disclosure Document.
This is the contract which governs the ongoing relationship between the franchisor and franchisee and is the basis of the whole franchise. It is therefore vital that it is properly developed for your specific business and not just ‘cut-and-paste’ from other agreements.
Documentation covers digital and online systems too, including data gathering and sharing, POS systems, online accounting and suitable communication tools. One of the advantages of a franchise should be that it allows franchisees to benchmark their performance against others, and franchisors to spot areas where the right support or training can maximise potential.