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How to franchise your business

Written by: Ian Macleod

Article Overview: If you are ready to take the step to start selling your own business as a franchise, you’ll need to do a lot to make it viable. Your business is a success. You have a cadre of loyal customers, strong earnings and a steadily expanding base. At this point, many business owners look to franchising their business as the next step. Though this is a good alternative, and potentially very lucrative, selling a franchise is a vastly different enterprise than running it. You’ll need to master new skills if you want to be a success in the highly-competitive world of franchising. Here is a brief list of what you need to be aware of:

How to franchise your business

HOW TO FRANCHISE YOUR BUSINESS

If you are ready to take the step to start selling your own business as a franchise, you’ll need to do a lot to make it viable.

Your business is a success. You have a cadre of loyal customers, strong earnings and a steadily expanding base. At this point, many business owners look to franchising their business as the next step. Though this is a good alternative, and potentially very lucrative, selling a franchise is a vastly different enterprise than running it. You’ll need to master new skills if you want to be a success in the highly-competitive world of franchising. Here is a brief list of what you need to be aware of:

1. Is your business a viable franchise? Some businesses lend themselves to franchising, while others do not. Before you take the plunge, you’ll have to do your homework. Are there any other similar franchises? What business models do they use? How saturated is the market? What will you have to change, add or remove parts of your business to make it attractive to a potential buyer?

2. The business is the product. When you were running your business you were selling a product or a service to your customers. Selling franchises is no different, except now the product you are selling is the business itself. Your pitch will have to be enticing enough to attract serious buyers who are capable of running their own business.

3. Your role will change. Where as before you were the owner/operator of a successful small business, now your role will change into something much different. Instead of managing the day to day operations of a store or shop, you’ll be acting as an executive overseeing numerous franchisees and ensuring your franchise business continues to grow. The responsibilities you have will be vastly different than those of a small business owner, and you’ll need to be ready for it.

4. You are starting over again. Just like with any other new business, you are going to experience the business cycle all over again. Starting out you may not have a lot of cash flow, your expenses will be high and you will have to spend a lot of time learning the ropes. As time goes on and your franchise business grows, new problems will arise just like they did when you were operating the original small business.

5. You will need to find good franchisees. Setting out into the world of franchising requires you to carefully watch over your brand. Finding strong, reliable franchisees is a key to this process. You won’t get very far if you sell your franchise to the first person who comes along. Make sure your buyers are competent and capable business owners.

6. Your franchise agreement is your foundation. If you decide to start selling franchises, drafting a strong, reliable franchise agreement is essential. This will be the most important document in your franchise business, so taking the time to ensure it is a quality product is a vital step. Even if you have to spend extra to consult a solicitor or franchising expert, it will be well worth the investment.

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Article Tags: business cycle, business models, business owners, competitive world, earnings, franchise business, franchisees, franchises, homework, loyal customers, new business, own business, owner operator, pitch, plunge, small business owner, successful small business



Related Forum Posts
What are the reasons why you would NOT buy a franchise? - Even though I'm a strong believer that franchising as a great business model, I would personally not buy a franchise. My main reason for not buying a franchise is that you're not your own boss. You take all the risks without really being in control of your business. To me that's the biggest drawback. What about you? What are the reasons why you would NOT buy a franchise?
Re: What is the Best Franchise? - As a franchise owner the things that I look for in a prospective franchise is: 1- A proven track record. Too many franchises try and branch out long before they have perfected their product, don't become a guinea pig for them to figure out what works and what doesnt. 2- Support. A good franchise should have great communication with it's franchisee's and be available to meet it's franchisees needs. Youre only contact with them shouldn't be when you have a problem. Good franchises involves it's franchisees in building it's business. 3- A Great System. McDonald's doesn't exactly make a good hamburger but they have an excellent system of conducting business. The real value in a franchise is the system, not necessarily the product. There are many other factors in deciding on a franchise but many of those are personal to you and your situation. The best thing to do is to conduct as much research as possible and speak with every current franchisee you can and get a feel for the franchise. garyshouldis.com
NEED SOME CLARIFICATIONS - My mother and I own a fantastic birthday party business. We have always thought it would be a good franchise for anyone wanting to work out of the home. How would we get our business to franchise? The parties include a costumed character, a birthday card art project, interactive story times, and themed games. We are based in Buffalo, NY . It is very successful here, and we want to get it out to the world, while making a couple bucks. How do we franchise this?
Franchising vs. Licensing - While Ken's definition of a franchise is correct, I disagree with his statement that a franchise and a license can mean the same thing. A franchise [u:2pwsjr5r]contains [/u:2pwsjr5r]two licenses. A trademark license (the name and fee) and a business opportunity license (a system and a fee). The combination of those licenses in the same relationship creates a franchise. If you want to license a business opportunity, you need to tell your licensee that they [u:2pwsjr5r]cannot use your trademark[/u:2pwsjr5r]. If this is your growth strategy, you will neglect to build a brand. While that is not always important, it often is. We tell our clients not to think of whether a particular business relationship will be, but instead to structure the relationship the way it makes sense from a business perspective. If it then turns out to be a franchise or a license, then so be it. The difference in cost between the two forms of expansion, done properly, is not very signficant. If you are interested in learning more, I would be happy to send you a free copy of a one hour seminar on "How to Franchise a Business." It goes into some detail on this topic. You can write to the email below or get it on my website.
Hello I am a franchise expert - Hello, I recruit franchise owners for successful franchise concepts based in the USA. Many of my franchises are looking to expand north to Canada in all major centers. I enjoy networking and answering questions about franchising. If anyone is interested in the franchise world or looking to buy a franchise then contact me. I have a wealth of information and like to help. Thanks for your time. Michael Somer


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