Tweet

How to Franchise

Written by: John Power

Article Overview: How to franchise. Business owners should follow these steps when developing a franchise program.

How to Franchise

Developing and operating a successful franchise program involves six different steps, or parts: 1. Preparation of the franchise legal documents

2. Writing an operations manual

3. Developing a marketing program

4. Advertising the franchise program

5. Selling the franchise

6. Managing and supporting the program

Franchise legal documents

In order to sell franchises it is necessary to first have a Franchise Disclosure Document (FDD) and Franchise Agreement. These are parallel documents that mirror each other. The FDD explains, in everyday language, the details of the franchise program, while the Franchise Agreement is written in legal wording, and is what actually binds the franchisee to the program. The FDD must be written in a very specific format, in a prescribed order, and must contain the exact disclosures as required by the Federal Trade Commission.

There are "do-it-yourself" packages for the preparation of these documents, but in our view, this is a poor way to develop franchise documents. Preparation of the franchise documents involves correctly establishing many program variables, the disclosure of much detail, which comes from several hours of interaction with the person preparing them. You do not want to make a mistake with your franchise documents. New franchisors need advice, direction, consulting, and assistance from someone who has extensive experience in the preparation of franchise documents. This may be a franchise consultant or a franchise attorney.

The Operations Manual

Franchisors are required to provide training to their franchisees, and are required to give an Operations Manual to the franchisees, normally at the time that training begins. The Operations Manual should be written to the "least experienced" franchisee, and should contain, at a minimum, sections about the franchisee's relationship with the franchisor, opening the business, operating the business, the procedures specific to the industry, recommendations and guidance for hiring employees, and a series of operational and franchise forms for the daily function of the business. The Operations Manual is normally prepared by a franchise consultant.

Marketing Program

You will need both electronic and printed response materials. There are certain successful norms that have been established in the franchise industry for the type of materials used. You can obtain some samples from franchisors, decide on your own approach, and then hire a photographer and graphic designer to prepare materials for you. It is not necessary to spend a large amount of money on this part of the program, but the materials should look professional and should convey your message.

Advertising the Franchise Offering

There are many ways to advertise a franchise program. In the past, newspapers and print media were the main way to generate leads, but these vehicles have become less effective. Over half of franchise inquiries now come from the internet. The problem is that there are hundreds of internet sites offering franchises, and franchisors receive many casual inquiries from people who simply "check a lot of boxes" on one or more sites, indicating interest in many different franchises.

We suggest that you establish a budget, perhaps a few thousand dollars a month, depending on your development plans, select a few internet sites, and then be prepared to receive a lot of "chaff" in which there will be some qualified leads. It has been estimated that one internet inquiry in 60 actually buys a franchise. However, you cannot ignore the internet when selling franchises.

You should established a Google Ad Click advertising program to specifically push your franchise offering toward those seeking something similar to what you do.

You may consider exhibiting at franchise shows, but you will probably find this to be quite costly, and you may obtain a greater number of inquiries, per dollar, with your own advertising program.

Selling Franchises

It is desirable to sell franchises yourself, if you can. If you need assistance, there are many franchise brokers in the industry to assist you. Some of them only generate qualified leads, while others actually become involved in the sale process. Be careful not to pay too high of a percentage of the franchise fee as a commission. If the commission paid is too high you may have insufficient revenue remaining to adequately train and support the new franchisee during their start-up period.

Managing and Supporting the Program

Good franchisors do everything possible to help their franchisees be successful. Each franchisee needs access to a franchise consultant, who represents or works for the franchisor, to help them with day-to-day problems and questions. In the beginning the franchise owner or existing staff may serve in this roll. As more franchises are sold, it will be necessary to hire someone. Your staff does not have to be large and just a few people can support several dozen franchises.

We will be pleased to provide additional information about any of the suggestions outlined here.

More information can be found at: www.biltmorefranchise.com

Related Articles
  Franchising with all its Success
  About 60% of all franchise opportunities have less than 50 units.
  Why Use a Franchise Consultant?
  Did you know: NIIT Franchise was present in Malaysia in 1997?
  Master Franchises Explained

Article Tags: disclosure document, disclosures, fdd, federal trade commission, fr, franchise agreement, franchise attorney, franchise consultant, franchise disclosure, franchise documents, franchise program, franchisee, franchisees, franchises, interaction, legal documents, marketing program, nbsp, parallel documents, program variables



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: Info for would be franchisers... - [quote="Sebastien":2gam0klq][quote="BuzzAroundBooks":2gam0klq]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to.[/quote:2gam0klq][/quote:2gam0klq] That is really what I look for in any industry publication. We lead busy lives and when people fill their magazines with fluff, not only does it benefit no one, but it makes us truly appreciate those that don't. Thanks!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Small Business Internet Marketing

Providing Feedback

How to Develop Your Powers of Thought.

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.