You have decided that you can no longer be selfish and keep your fabulous store concept to yourself. You have decided to franchise. That’s fantastic, but what exactly do you need to do now? Here are the steps you should take to go down this road
1) Are you really ready?
Desire to franchise may not be enough to get the concept off the ground. Many companies that register to franchise don’t ever actually start to franchise. A great place to start the race is to make sure you are ready to be in the race at all. Consider your concept and why it works. Is that translatable in many different markets or is it specific to your market? Have you already been able to open a second or third location and been profitable with those as well?
2) Check your money.
Franchising can be an expensive business, especially if you are looking to get into numerous states all at the same time. Consider the amount that you might have to outlay in the beginning including fees to states, and later salaries for employees brought on to help with the franchise operation. Also, does your current operation turn enough profit to make it viable as a franchise?
3) Lawyer up.
Once you determine that you are in fact ready to franchise your business, it is invaluable to have competent franchise counsel on the ground with you when you start. At a bare minimum, franchising will require new incorporations, agreements, registration of intellectual property, and drafting of numerous disclosure documents. Failure to get the right ducks in a row from the beginning can be costly and time consuming.
4) Figure out how it’s going to work.
In addition to figuring out how the business is going to work from a financial perspective, you also need to make decisions on how the franchise is going to operate. Questions include what kind of term are franchisees going to have? What kind of license fees and royalties will franchisees be required to pay? Are you going to offer a training program and if so, what kind? How much geographic territory can a franchisee have? Do franchisees have to buy equipment and supplies from you?
5) Get your people.
The franchise-side of the house should be considered a business unto itself which means that you will need to have at least someone who is responsible for the day-to-day operations of the franchise business, as in selling it and handling franchisees.
6) Start selling.
Once you have gone through the process of getting your franchise set up, you need to go out and sell it. You need to find individuals or businesses who are willing to take the plunge with you, keeping in mind that franchises are an inherently high-risk investment. You need to have good sales people who understand your business and are going to sell it well.
One of the most important things to have with you on this journey of franchise discovery is competent counsel. Consider contacting Brett Trembly to help you navigate through this decision and the process if you decide to take the plunge.