Do you have an amazing product or service that you know people will love? Do you want to scale your brand to a national, even global scale?
Then franchising your business may be the next step for you.
But where do you even start? Most franchises you know are household names like McDonald’s or Coca-Cola. Learning how to start a franchise business can be intimidating—even for the most determined entrepreneur.
Here at Capitalism.com we break down the barriers that block you from reaching your entrepreneurial dreams. We want you to grow your business to the heights you always dreamed of. And if franchising is your chosen route, then we are here to help. (Are you a franchisee? Check out this interview between Ryan Moran and an experienced franchisee)
In this article, we are diving into the main steps on how to franchise a business and 10 tips you need to make your franchise successful.
Finding a “franchising a business definition” can yield some complicated answers. Simply put, it means that you are selling your proven business model and trademark to people who will replicate your brand and business.
If you want to know how to franchise a business, you need to determine if it’s right for you. Coming up are the pros and cons to franchising.
You now know the advantages and disadvantages to franchising a business. If think you’re ready to dive in, then follow these 10 tips on how to franchise a business.
Franchising your business is a lengthy process. Knowing where you stand prepares you for your next step before you finally start selling franchises.
How to franchise a business is broken down into four main steps:
Don’t neglect the first step (it can take the longest). Franchisees want to know that you have a proven business model that already works. With the help of a detailed operations manual and some advice from you, franchisees should be able to duplicate your business in a new location.
When you franchise your business, you need to adhere to federal and state franchise laws.
Part of the legal process is completing your Franchise Disclosure Document (FDD). This legal document outlines your legal obligations as the franchisor, as well as the expectations of the franchisees. This document aims to reduce confusion about operating your franchise, including royalties, locations, and more.
Your FDD is then forwarded to prospective franchisees for review prior to buying a franchise from you.
Hiring a lawyer is not required but it can save you from headaches.
Federal and state franchise regulations can be complicated and we only provided a broad overview of the FDD. It can be worth paying for somebody who specializes in these types of laws for a living. A lawyer can offer you a more comprehensive understanding of the legal requirements of a franchise and the legal relationship between you and your franchisees.
Also, having a lawyer to consult on legal matters can help you avoid costly infractions.
When you franchise your business, your focus shifts from operating your local business to selling franchises. Here are a few pointers to consider when franchising your business.
Remember: when people consider buying your franchise, they look for a streamlined model that is easy to replicate. Make sure that your business is already succeeding locally before you consider expanding.
Individual franchisees can dispute over implementing new innovations. Your role as franchisor should include diplomacy. Creating a collaborative culture can help franchisees feel independent but also remember that they belong to a community of fellow franchisees.
You may want to grow your franchise to be a national brand but don’t forget to think local. There’s value in franchises catering to their respective communities. Encourage your franchisees to market to their local communities and represent the franchise in community events.
Franchising your business can grow your customer base. However, many franchises struggle with providing consistent customer service. When people walk into a franchise, they should expect to receive the same level of amazing customer service as any other location. Having a strong customer service training program is essential to any successful franchise.
Before you franchise your business, do your market research. You need to check if the market will support your business if you franchise.
Here are nine questions to get you started:
Many people already sell similar services or products to yours. When everything looks the same, people use price as the deciding factor.
It becomes a race to the bottom.
And that’s no way to grow a franchise. Branding is your secret weapon to standing out and growing a successful franchise.
Here at Capitalism.com we define a brand as the collective emotional response to your service or product. When people interact with your brand, you want them to feel like a hero.
It’s worth spending time or money (by hiring somebody) to craft your brand. Not only will this help you sell to customers, it will also help you sell franchises.
A website with just your business location and services isn’t enough. Website optimization is key to surviving in this digital market.
When prospects visit your website, is there a lead capture form? Is there a box where customers can enter there name and email address? Building an email list is useful for increasing your brand authority and converting prospects into buyers.
Email isn’t used just for announcing promotions and distributing coupons. You can use email to drive traffic to your sales funnels. Use email to butter up your customers and then send them to a landing page or sales funnel to convert that prospect into a buyer..
Advertising has gone digital online but walls of text and fancy web layouts can feel artificial. Video can solve this challenge for three reasons:
Combined with a top-notch sales funnel, a video will attract prospects, convert leads, and close sales.
Transitioning into franchising can be an adjustment, especially after operating your single business locally.
You’re no longer the business owner of that independent location. You’re a franchiser now. You need to think bigger. You will have a network of several franchise locations operating under brand.
And with your title change also comes with a new set of responsibilities:
Franchising your business requires you to recruit talented people to scale your brand. You need talented professionals to capitalize on your business strengths and cover your weaknesses.
And this doesn’t just mean selling to managers to open up different franchise locations. You might consider hiring a creative director to steer your brand. You can also add marketers to your team to level up your marketing presence.
So you want to expand your business into another state. Guess what? There are more rules you need to follow! (Surprise!)
Here are additional steps to take before your franchise can venture into new territory.:
Influencer marketing is booming and for good reason: influencers drive sales.
According to TapInfluence, influencer marketing has “11X higher ROI than traditional forms of digital marketing.”
When you collaborate with an influencer, you hire them to promote your brand to their followers. This is useful when that influencer has a demographic you want to target. If you haven’t built enough of that demographic in your following, just “borrow” an influencer’s audience.
If you want to explode your franchise growth, then Influencer marketing is worth investing in your long-term strategy.
According to Franchise Law Solutions, franchising your business may cost anywhere from $30,000 to $75,000. This can include finalizing your sales strategy, completing the legal paperwork (including your FDD), and hiring a lawyer to guide you through the franchising process.
Selling a franchise to an interested franchisee can take at least six months. It widely varies depending on what stage you are in your business (perfecting your business model, finalizing your legal FDD, recruiting franchisees).
While it’s highly unlikely that you will franchise your business with zero dollars, there is one route you can take. Go in with a partner who has the capital and can be a passive investor. They fund your franchise while you take care of all the legwork. Naturally, for a scenario like this to happen, you need an existing track record of running a successful business.
When we think of franchises, we often think service businesses, especially restaurants. Whether your business is selling a product (like Coca Cola) or a service (like UPS), the process of franchising your business remains largely the same. You’re still required to perfect your business model, complete your FDD, and sell franchises..
A company can be LLC and then the owner can choose to franchise the business. However, if you are a franchisee and choose to buy a franchise, it does not automatically apply the LLC status to your individual franchise.
Before reading this article, learning how to franchise a business sounded intimidating. Scary even.
There’s so much to know. So many things to do. Analysis paralysis kicks in.
But that’s no longer a barrier. You’re equipped with the knowledge you need to franchise your business and grow a million dollar brand.
More importantly, you know where you stand. Are you at the beginning and still perfecting your business model? Or maybe you’re already prepared to sell franchises. After reading this article, you know what your next step is.
So what are you waiting for? Take the next step.