What is a franchise business? In short, it’s a method of distributing goods or services through a licensing relationship.
While not the only way to expand a business, franchising is proven to be one of the quickest, most cost-effective ways to grow your brand and increase sales. In fact, it’s estimated that franchising has created almost 19 million jobs worldwide — accounting for 10% of all jobs in the private sector.
It is probably one of the oldest business models around, but it’s also one of the most misunderstood. While many entrepreneurs dream of having franchisees, they don’t really know how to get started or what it takes to make their venture successful.
If you are thinking about franchising your business and want some tips on how to get started, you’ve come to the right place!
Define your franchise and be careful:
There are many ways to grow a business. Franchising is one way to expand, and it’s an option that many small businesses have taken advantage of. The franchise model is a system where one company (known as the franchisor) licenses its trademark, products, or services to another company (the franchisee). It’s important to note that a franchise is not a partnership; the relationship between the franchisor and franchisee is more like that of two independent businesses.
But unlike most other businesses, there are strict requirements for franchising in Australia. Those include preparing a disclosure document, setting up contracts with your franchisees, and registering your trademark if you want to license it.
There’s also an Australian Franchise Code of Conduct that covers advertising information for potential franchise buyers as well as how disputes get resolved between franchisors and their franchisees.
Your initial impression is important, especially when it comes to money and investments. Don’t waste time on prospects who won’t be able to meet your standards for quality workmanship and top-notch customer service.
Create a clear concept on your Franchise Business
Have a clear concept in mind. You may have an idea of what the end result of your franchising should be, but if you don’t have an outline for it, then how can you possibly expect potential partners to buy into your vision?
Put together a clear concept and business plan. The best franchises are often simple concepts executed well. When you franchise, you need to think about how the business will be managed and marketed at scale. If your product or service is too complicated, it will be difficult for franchisees to understand. And if franchisees don’t understand, they won’t buy!
For example: McDonalds has a clear concept – burgers and fries; Subway has a clear concept – custom made sandwiches with fresh ingredients; MaidPro has a clear concept – cleaning services for homes and offices; Gold Gym has a clear concept – fitness club that provides personal training services in addition to exercise equipment; bubble tea franchise has delighted the world by making business simple and profitable.
It is very important that you think from the point of view of the person to whom you are representing the service. In the beginning, everything must be clear and defined. Any doubt can distract your client from the idea of engaging in cooperation.
Training is essential
Just because someone is interested in partnering with you doesn’t mean they’re ready to open up shop on their own yet! Make sure the people that work for your company know how the process works before they start making decisions about customers independently.
Your team members need to understand the ins and outs of everything you offer: your products, your services, your processes. They need to know what selling points matter most, the day-to-day procedures, and how to handle potential issues. These things will be easier for them to learn if they have great training materials. As such, you should consider designing workshops that are well-planned, consistent and up-to-date in nature.
This will ensure that all your staff members will be able to perform their duties with ease. They should also be conducted by a relevant expert or professionals who can clearly explain everything there is to know about your brand and business model.
Get a good lawyer and accountant
Use franchise consultants and brokers to help you find the right franchisees for your business model.
The best way to get those important first franchises off the ground is to work with professionals who understand franchising and how it works.
Franchise consultants can help you create a business model that will attract potential franchisees, while franchise brokers can connect you with actual franchisees. Both of these professionals are well worth the money in terms of saving time, stress, and money down the line.
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This is an area where skimping on professional fees can truly come back to haunt you later on in expensive ways when things go wrong. Choosing your team carefully will set you up for success in the long run, so don’t be afraid to invest in high-quality people who know what they’re doing.
Utilise the technology
Look to utilise some of the latest technologies when it comes to operating your franchise. Don’t be afraid to go lean, and let technology do much of the heavy lifting!
There are tools out there that can help you manage your business more efficiently, from improved communication with franchisees, to slick management software that will increase productivity and reduce overheads. One good example is a vendor management system that allows you to better organise all the different relationships you have with vendors/suppliers, which is essential for any increasingly globalised business.
If you build it, they will come. It’s a great line from a movie, but it doesn’t work when your business is the “it.” Franchisees are investors. They expect to make money. You need to have a product that has a proven track record and can be reproduced by franchisees. You must also have a well-thought-out plan for growth that is realistic.
To make sure you’re on the right path, ask yourself: Will franchisees be able to make money? Will my franchisees be happy with the support I’m providing? Will I be able to promote the brand successfully? If you can’t answer yes to all three questions, then you need to rethink your plans for franchising.
Also read: 6 Best Ways on How to Cut Business Cost
Franchising isn’t as simple as just giving someone access to your trademark and business model. Because franchisees will become extensions of your company, you need to ensure that their actions are aligned with your corporate style and culture. Be sure that your franchise agreement covers everything down to the smallest details so there can’t possibly be any misunderstandings.
Once your business has grown to a size where it runs smoothly and successfully, you may start thinking about franchising. While there are many advantages to franchising your business — the most obvious being that you get to keep the rights to your successful business model and proven brand.
The first thing you want to do when looking at franchising your business is to make sure that it fits with your long-term goals and dreams. Franchising can be a great way to grow your business, but it is not right for everyone. You have to be ready and willing to share your success with other people and let them be part of your team.