Did you know? A franchise is a third-party location that is licensed out to a franchisee. It's a great way for an existing business owner to expand their business without having to personally run every location while still reaping the benefits. By making your company's processes, likeness and other facets of its operation available for franchising, you can reap the rewards without having to manage everything.
In addition to the possibility of rapid expansion, franchising your business can result in a steady stream of incoming royalties, as franchisees continue to operate your expansion locations, while the increased market presence results in more advertising dollars and better buying power. Key takeaway: Franchising your brand can benefit you in several ways, from increased brand recognition to increased revenue.
When deciding whether you should franchise your business or not, one major consideration is how long the entire process will take. The length of time varies depending on factors that could be unique to your business or industry. While some experts estimate that it could take between 90 to days to complete the franchising process, Anders suggests that time frame isn't always accurate. The International Franchise Association website is a great place to start to learn about franchising and find professional services, like a lawyer, sales department and more.
Franchising your business entails taking on risk, since you won't be in complete control of how things operate on a daily business. By taking the time needed to ensure you're protected, either through the assistance of a franchise lawyer or franchise broker, you may need more time than others, but you'll at least cover your bases.
Additional reporting by Andrew Martins and Nicole Fallon. Some source interviews were conducted for a previous version of this article. How to Franchise a Startup: 5 Tips for Success. Sammi Caramela. Expansion is expensive and time-consuming. By franchising your company, you can reach new locales without having to closely manage the new operation. Franchising your business allows you to quickly expand without having to closely manage the new locations.
Careful consideration of how your franchisees will operate their third-party locations is imperative to ensure brand consistency. The benefits of franchising your business include expanding the reach of your business and gaining additional revenue streams. This article is for any small business owner looking to franchise a startup company.
How to franchise your business Instead of owning and operating all the locations yourself, you can offer your business model as a franchise opportunity, and allow other entrepreneurs to run each establishment under your brand name. Do your homework. These include the franchise agreement and the franchise disclose document: Franchise Agreement The franchise agreement exists so you and your franchisees are on the same page.
Experiment before you expand. Hire professional help. Create a marketing strategy. Establish franchisee training. What are the benefits of franchising your business? How long does it take to franchise a business? Help and Support It is strongly recommended that you use the services of British Franchise Association affiliated advisors for the development of your franchise model and legal documentation.
Costs will be individual to your own circumstances although a good consultant will be able to offer some guidance according to your own needs. The more development work you do yourself the lower the consultancy costs will be however that assumes you have the expertise and the time to develop the necessary systems. W hy use a franchise consultant when franchising your business. Franchising is not something that can be learnt overnight and so when deciding to franchise your business, you will require the services of a franchise consultant.
This consultant should be a member of the British Franchise Association bfa , and hence have a proven and successful track record in franchising. The franchise consultant will use their experience to help you build a sustainable franchise model and will navigate you through each step of the franchising journey.
Whether you are a small to medium sized business or a corporate organisation, franchising is continually proving to be a robust and effective growth strategy, even in these challenging economic conditions. What does it take to develop a franchise business? Developing a successful franchise proposition requires you to satisfy a number of key criteria such as: have you proven and piloted your concept already, do the figures stack up, does your business proposition have longevity and so on.
Franchising your business also requires you to transform and document your business into a series of organised systems and procedures that can be replicated by others, as well as the implementation of a strong training and support infrastructure that will ensure your franchisees follow your systems and maintain brand standards to the letter from day one.
Short cuts now can often lead to expense in the long term! It is therefore hugely important that you receive sound advice and guidance from an experienced franchise consultant from the outset, to firstly establish if franchising your business is the right decision for you, and if so, how best to structure and develop your franchise proposition, in order to avoid any costly mistakes further down the line.
How can a franchise consultant help me? There are many aspects of the franchising journey that a franchise consultant can help you with depending on whether you are franchising for the first time, or if you are expanding an established franchise network.
Whichever applies to you, it is so important that you choose your franchise consultant carefully, selecting someone who you feel you can build a good relationship with and who has a thorough understanding of your business, culture and strategic objectives.
There are a number of franchise consultants to choose from, each of whom vary in terms of skills, experience and fees. Therefore to assist you in the selection process, here are a number of key factors to help you choose the right franchise consultant for your business:.
Appointing the right franchise consultant for your business is an extremely important decision and is one that you should take time to research fully before entering into a formal relationship with your chosen franchise consultant. One would highlight from personal experience however that your journey into franchising will undoubtedly be more successful, your franchise business model will be more robust, and you will spend less on avoiding future business challenges, if you appoint an experienced franchise consultant to navigate you through the franchising process.
The role of a franchise consultant will vary greatly dependent upon the maturity of the franchise that they work with and the experience of the franchise owners.
There should also be a financial analysis based on the financial figures achieved by the parent business to determine whether the potential income from franchising is attractive to both parties. If the decision is to proceed, then the consultant will, in all likelihood, become involved in developing marketing materials both web and hard copy , advising on territory size and mapping, developing the documentation for the franchisee recruitment process, assisting in franchisee interviewing and assessment, franchisee business planning, engineering the operations manual, liaising with an appointed lawyer regarding the franchise agreement and devising the on-going training and support programmes for franchisees.
Alternatively the mature franchisor may need advice or support in a specific aspect of the business, such as lead generation or franchisee motivation. A good franchise consultant should, through their own experience, be able to assist at any stage of a franchised business from inception through to exit. How the author supports franchisors.
Bill has been active in franchising since working with both franchisors and franchisees. His business background covers a diverse range of sectors from retail to recruitment with his roles encompassing customer service, training, sales and marketing.
As Franchise Director of a national recruitment company he has been instrumental in the launch of numerous successful franchisee start- ups. A combination of, creative thinking and hard work, is his recipe for growing a business. Bill is an active member of the British Franchise Association, having held both regional and main board positions.
He is also a former chairperson of the Franchise Group for Scotland. Using a good franchise consultant will bring an extra perspective to your business as well as a solid understanding of franchising. They will initially help you to identify if franchising is right for you and if so how will advise you on developing your system as a franchise. Generally the services offered by franchise consultants are:.
When finding a consultant look at a few, preferable those who are bfa members, and from asking about their existing and previous clients, including those they recommended didn't take the franchise route, you will get a good idea of who will be best for your business. To ask a franchise consultant a question click here. Your own accountant should be able to help you with your financial planning, including your business plans and guidance for franchisees on what they should be achieving from their business.
It is essential that you take legal advice, and should seriously consider using a lawyer that specialises in franchising. The bfa has a list of franchise lawyers that are affiliate members click here for the list. The lawyer will help you prepare a comprehensive agreement and you may need advice on registering your trade and service marks. By using a specialist lawyer it will increase your brand value and will give you and your franchisees greater protection.
We understand that you need to clearly see how your membership will aid your development. It will highlight areas to work on and the reasons why. After accreditation, there are of course a host of benefits. Here are 10 reasons why joining the bfa should be a matter of course for any franchisor with a passion for helping their franchisees succeed:. In joining the bfa you are demonstrating that you have made a commitment to franchise in an ethical and responsible way.
Membership also provides value through the franchisee cycle that can impact positively on the value of any resale. The bfa is an incredibly close-knit group of supportive, friendly and knowledgeable people. How to successfully scale up your franchise The British Franchise Association reveals the formula to success when expanding your franchise in the UK.
However, as is abundantly clear, this comes with many challenges. Franchisors who wish to see their business grow to upward of 50 units need to revise what strategies they will adopt to achieve this, as scaling up can sometimes lead to a dip in service quality if not done sustainably and with due care.
As the franchisee network grows, there is a responsibility to have a support structure in place. This, teamed with running your own operations, can sometimes take its toll. However, franchisees lift the weight of this as they will be perfectly trained and supported by the franchisor to own and operate the units effectively and successfully, giving the franchisor more time to focus on the overall business development. This point is often where they need to employ members of staff.
The bfa recognises the hard work this takes, and so we hold an annual Superbrand event, to bring together the biggest in franchising, from international developers to UK franchisors to franchisee entrepreneurs.
Book your tickets here. Ask about franchising your business Franchising your business Franchise your business home Need help franchising your business? Why franchise your business? Is my business franchiseable? Turning a franchise idea into a business opportunity Benefits of franchising your business Disadvantages of franchising your business How to franchise your business Developing your franchise business Cost of franchising a business Why use a franchise consultant Role of a franchise consultant What professional advice should I seek?
Joining the British Franchise Association How to scale up your franchise. Last UpdatedNovember The benefits of franchising your business Franchising, when done well can help you to make the most of the business idea that you have, to expand and to grow and to enjoy the experience with some really interesting people some of them can be challenging though!
Considerations Of course, net margins may be lower because there has to be an income that will be attractive to your franchisee and so you will take a smaller slice but it will be from what we expect to be a larger cake. Why banks like franchising The enthusiasm of the major banks to lend to franchisees demonstrates their faith in the franchise industry, where the failure rate is significantly less than in independent start-ups.
Give it a go! Those who step forward boldly succeed! Click here to ask Nick a question for FREE If you want to find out more about franchising your business, click here to contact Ashtons Why franchise a business?
Recession Proof No industry is recession proof. Less Hassle In a franchise the day-to-day administrative burden is shouldered by franchisees. Is my business "franchiseable"? How to go forward You need to assess what has made your existing business successful and how that success can be achieved in different geographical areas, not to mention in someone else's hands.
Things to consider Ensure your business will stand the test of time. To summarise, not all businesses are suitable for franchising but most business concepts can be. A "franchiseable" business would need to be: Credible — your concept needs to be proven with a good track record and an experienced management team. It needs to have a good local press and public acclaim. Profitable — franchising is not a means of rescuing a business that is under-performing, a business needs to be already successful and generating a sufficient gross profit margin to allow you and your franchisees to make money.
Unique — your business needs to have a unique selling point that will allow it to be differentiated from competitors. This sustainable competitive advantage would allow it to compete successfully in its' market nationally, with possible potential to expand internationally. Transferable — you need to have a business where the systems, procedures, expertise, skills and know-how can be transferred to others.
Teachable — you need to make sure all the systems are in place and the operating systems of the concept documented in manual form. You should also be able to train others in three months or less in the use of your systems and procedures.
Supporting — you need to have or be able to acquire the ability to provide ongoing support to your franchisees. Affordable — if the franchise is very expensive there will be very few people who could afford to buy into your network.
Turning a franchise idea into a business opportunity By Bill Hendrie, The Franchise Development Centre The first point to be made here is that you cannot turn an idea into a franchise.
When deciding whether or not a business could potentially be successfully developed as a franchise, we look at five key areas initially: 1. Proven successful format The franchisor is going to grant the rights to potential franchisees to replicate the original business.
Relatively easy to master Naturally enough, in any business start-up, the owner will want to produce turnover and profit as soon as possible. There are a number of key reasons why being part of a franchise is a safer option: The system has already been proven - All good franchise systems have been developed, tweaked and improved before the first franchisee starts to operate. The franchisor has borne the cost of development and in many cases learnt from costly mistakes.
By following this already proven system franchisees avoid both the development costs and replicating the mistakes made by their franchisor. The knowledge of the franchisor - Most business knowledge is gained through experience. As a franchisee you have the opportunity to tap into the experience of your franchisor.
Particular attention should therefore be paid to the length of experience that your franchisor has in running the core business. The brand name - A powerful sales tool which should stand for consistency of product or service. However with McDonalds you know exactly what you are getting. New franchisors normally do not have the benefit of a reputation out with their immediate vicinity.
The launch package - Reputable franchisors almost always supply a comprehensive launch package. This support may take the form of centralised services such as invoicing, payroll and training. It will almost certainly include corporate marketing ideas and initiatives. Again the franchisee is relying on the franchisors previous experience of most situations, to help guide them. Due to the very low failure rate within franchising it should be easier to access capital in order to purchase a franchise than it would be if you were starting a stand-alone business.
This will obviously depend on your financial status. In this article, we look at the seven steps you need to take in order to franchise your business. Becoming a franchisor is a big step. First things first; what exactly is franchising and how does the franchise model work? In return for a franchise fee, start-up fee and ongoing royalty fees, the franchisee gains brand recognition, a tried and tested product or service, the chance to join a training programme and ongoing business support.
But every franchise is different; some offer extra benefits, such as nationwide marketing activity and the opportunity to attend international franchise conferences. So, how do you turn your business into a franchise? Here are the seven key steps you should take:. Some businesses are more suited to the franchise model than others, and there are some basic standards that must be met.
Your business needs to be credible and teachable, have a unique selling point and provide an adequate return on investment. The British Franchise Association BFA is a great reference point if you want to find out how well your business could be adapted into a franchise. To be sure your business has the potential to see long-term success, you should also put your model to the test for at least a year.
Ask yourself, for example, do you want to expand on a national — or even international — level? How many employees and outlets would you like? The answers to key questions like these will form the basis for your franchise business plan, allowing you to expand with a greater likelihood of achieving your objectives.
This code is a guide to the rights and obligations of the franchisor and franchisee. As there are no laws governing the franchise sector, the BFA acts as its regulator, offering useful statistics and advice to help get franchisors and franchisees onto the right path.
You may also want to become a member of the BFA. This will let potential candidates know that you are credible and willing to conform to industry standards that have been developed and protected over the last 30 years. Starting a franchise is a complex process, so it's a good idea to get legal advice from a specialist franchise solicitor.
The BFA has a list of affiliated legal advisors if you need help finding one.
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