There comes a point in your entrepreneurial career when you are faced with the decision of whether to franchise your business. While selling franchises is a proven way to grow a business, it’s neither intuitive nor cheap.
Most owners will need consultants and attorneys to shepherd them through the process of creating operating manuals and legal documents, with upfront costs running anywhere from tens to hundreds of thousands of rand.
But before getting wrapped up in costs, the business itself must of course be franchisable, which means it should be established and profitable, with processes and procedures that can be documented and learnt easily by others.
And in addition, there should be broad demand for the product or service it sells – not just in its hometown but wherever the business might expand to.If you think your business fits the bill, you could start on the road to franchising now.
Here are the five top steps you need to take first.
1. Make sure you’re operating the model you plan to franchise
Think about what you would do differently if you were starting your business from scratch, and then do it. Trying to sell franchisees something you haven’t proven yourself will almost certainly lead to disappointment.
Having no experience with the hurdles your franchisees are likely to face will make it harder to know how to overcome them.
So, if you’re running a home-based business, sell a home-based franchise, not a store-based one.
2. Squeeze costs
By reducing expenses in your own business you’ll not only save money yourself, but make your franchises more affordable as well. By optimising your income and expenses you’ll be able to more accurately determine initial franchise fees, the cost of setting up and running, and profit margins. These are all important numbers for prospective franchisees.
3. Open a second location yourself – but let someone else run it
There’s probably not a better way to find out if you can train others to run your business model than by opening a second location that you don’t manage yourself. It’s the closest thing there is to selling a franchise and you’ll still have the opportunity to tweak and fine-tune systems and operations to smooth out any glitches.
4. Start documenting your processes
Franchisees will need an operator’s manual telling them exactly how to run one of your franchises. Starting that documentation process now will save time and money later, especially when you turn your work over to a consultant to produce the finished product.
Be detailed and thorough. Depending on your concept, start with an outline on how to prepare the food, fix the problem or perform the service that is the backbone of your business. Start with the basics, take it through completion and troubleshooting, and then repeat that for each menu item or service you offer.
5. Fine-tune your marketing programme
Almost all franchisors charge their franchisees a monthly marketing fee in exchange for marketing support, which can be critical to their success. You may have been running your business on word-of-mouth advertising for 20 years, but people 100km away may not know who you are.
It’s highly recommended that even before engaging a franchise consultant that you do some advertising to see what works – don’t forget about social media either.
You may not think Twitter or Facebook are worth messing around with, but buyers will want evidence that you know how to use these advertising mediums.With the right business model and the right planning, franchising could take your business to heights you never dreamed possible.
Even if you choose not to franchise, the five steps outlined here could still help you improve your operations. Why not get started? You’ve got a lot to gain.