If your model is proven, you have a strong management team in place and there is a continuing demand for your product or service, one of the fastest and most effective ways of growing your business is to become a franchisor.
A franchise business is simply a method of expanding your business and distributing the goods or services it produces more widely. As the franchisor, i.e. the owner of the original business, you sell the rights to your business name, model, logo and product or service offering to a third party, known as ‘the franchisee’. They then set up in a different location.
Becoming a successful franchisor is certainly not without its challenges. As a franchisor, you lose some of the control you once had over your business. If the level of service or quality offered by a franchisee drops below the expected level, the reputational damage that causes will impact your brand. There’s also the potential for disputes, with communication breakdowns between franchisor and franchisee relatively common. A franchise model can also take a lot of time to set up initially, particularly when you consider the suite of training and support programmes you have to put in place to enable a franchisee to successfully represent your brand.
But that’s not to say these challenges can’t be overcome. Here are our five top tips to help you through the transition from small business to franchisor…
- Make sure your concept is clear
As a small business owner, you may have reached the position you are in on intuition alone, but as a franchisor, you need to put a plan in place for even the smallest business operations. Every step of the day-to-day running of the business must be included in your plan explicitly. Even if you think it’s common sense, you can’t rely on the judgement of a franchisee who will not understand the business as well as you.
To put a cohesive plan in place, you will need to take a step back from the business and question why your systems are successful. They will then need to be carefully documented so they can be replicated by franchisees.
- Choose your franchisees carefully
Picking the right franchisees is one of the most important factors in the success of your new venture. The relationship between a franchisor and franchisee is likely to be a long one, so don’t rush to any decisions. Take the time to get to know the prospective franchisee, understand their motivations and be consistent in your dealings with every member of your network. In the early days, the temptation will be to recruit any franchisee who shows interest, but employing a more selective strategy is the key to long-term success.
- Put training in place from the off
Putting a comprehensive training and support programme in place from day one will have significant benefits for both franchisee and franchisor. This training should be delivered before the franchisee’s business is opened to ensure a smooth, successful start. This will minimise any errors that are made and help to reduce the risk of reputational damage to the brand.
- Protect your brand
As a franchisor, by far your most valuable asset is your brand. This is what makes your business attractive to franchisees in the first instance and keeps your customers coming back for more. The biggest risk for a franchisor is losing control of that brand and allowing the actions of a third party to affect the way your business is perceived.
To reduce the risk of damage to your brand, clear guidelines about the use of brand assets must be established immediately. When it comes to brand protection, no detail is too small.
- Find a mentor
Where better to get advice than from someone who has been through the process before? There are plenty of potential pitfalls when franchising your business, so having someone you can turn to for words of wisdom when you need them will worth their weight in gold.