Opinions expressed by Entrepreneur contributors are their very own.
Are you able to franchise your corporation? In case you are studying this, you might have probably created a longtime brand that you simply imagine to be duplicable and able to provide as a franchised idea. What it’s possible you’ll not understand, nonetheless, is that the transition from business owner to franchisor has its personal challenges, past that of merely replicating the enterprise mannequin.
Over my 20 years in franchising, from the franchisor, franchisee and guide views, I’ve discovered that the success fee of a franchised idea is instantly dependent upon the energy and leadership of the franchisor.
Right here, I will focus on some vital expectations as you transition into this new function.
Honor your franchisees’ ambitions
Most franchisors come from an entrepreneurial background or are at the very least pushed by an entrepreneurial spirit. It is vital to honor this identical ambition and spirit that drives your franchisees.
A philosophical argument that used to make the rounds in franchising circles was whether or not franchisees might declare to be true entrepreneurs like their franchisors. The premise was that franchisors have been those who got here up with the enterprise idea whereas taking all of the dangers. Franchisees simply needed to comply with their techniques.
In at present’s atmosphere, nonetheless, franchisees have confirmed themselves to be expert entrepreneurs because of the ever-changing enterprise panorama with fickle shoppers, narrower margins, provide and staffing challenges, and extra. Individuals investing their financial savings and sweat fairness into your system need to be thought of your “companions” and never relegated to the function of a kid with no seat on the desk. It is your job to honor that notion.
Associated: Is My Business Ready to Franchise?
Be a relationship builder
To be a profitable franchisor, that you must show to potential franchisees that you may ship what you have promised when it comes to a viable enterprise mannequin, however you additionally want to have the ability to maintain optimistic, long-term relationships which might be mutually useful. And that you must be prepared to simply accept that although it is your system, you’ll be able to’t be a dictator. So, even when your mannequin meets the required standards, should you aren’t prepared to create a system that could be a win-win for each you and your franchisees, franchising will not be for you.
The underside line is it’s essential to win potential franchisees’ belief in you and your idea. As you try this, there are a number of different standards that you must meet in figuring out your “franchisability.”
Reveal versatility
Proving you might have a reputable franchise mannequin entails having at the very least one, however ideally a number of profitable worthwhile places up and operating. Having operations and recognition in a number of markets, together with an skilled administration workforce that may assist franchisees achieve success, can even set up credibility within the eyes of your future franchisees.
Provide a definite differentiator
Individuals need the acquainted, however additionally they need it to be differentiated from what’s already on the market. “Do we actually want one other burger idea?” is a typical query amongst franchising insiders. And but, there appears to be no finish to new burger-centric ideas opening (and shutting).
In my expertise, you’ll be able to nonetheless franchise a burger idea, however you want a twist on a identified commodity. Within the restaurant sector, for instance, regional or international spices can add a distinct tackle normal fare and feed into shoppers’ tastes or preferences.
You also needs to take native or regional preferences into consideration. In that very same vein, authorized necessities will differ from state to state, and typically from county to county, so be sure you’re updated on municipalities’ rules.
Providers and merchandise might should be tweaked in order that what you are providing is each wanted and can stand out within the market. Providing a number of income streams is at all times safer than having only one take-it-or-leave-it product.
In different phrases, your idea must be trend-worthy however not fashionable, one thing that may survive all of the ups and downs out there, not simply be a flash within the pan.
Guarantee transferability
Does your idea function with simple techniques that may be readily taught to others in a approach that can also be distinctive sufficient to not be simply duplicated with out your mannequin? Are your recipes simple to comply with? Does your know-how streamline the method or complicate it? Having the newest franchise techniques, operational processes, and an environment friendly tech stack all go a good distance towards idea transferability.
Moreover, having well-documented working procedures is crucial. Your sport plan should be clear and concise in order that when the franchisee replicates your idea within the native market, the directions enable them to construct a stable idea.
Lastly, one other must-have — and one which has been confirmed by having a number of places—is the flexibility to adapt to numerous business footprints, places, and geographical areas. In case your idea solely works on school campuses, you will not search for franchisees in rural settings, even when they give you an enormous examine. Take into account whether or not your idea has regional, nationwide, or worldwide potential. The way you select to increase ought to take these factors into consideration.
Create a placing model package deal
Earlier than advertising and marketing your idea, be sure you are presenting a enterprise that’s homegrown however not homespun. Evaluation your model — all the pieces out of your brand to your décor to your advertising and marketing supplies — by way of the eyes of a possible franchisee. Does it come throughout as skilled and convey the message you need the general public to embrace? Are the colours recent and the presentation participating? Because the franchisor, you are accountable for supplying an preliminary model package deal, in addition to ongoing help with pattern advertising and marketing supplies and market-tested techniques. You need to guarantee you might have all the pieces concerning your model and easy methods to promote it buttoned up and well-developed.
Associated: I Was a Franchisee And Now I’m a Franchisor. Here’s My Parting Advice to New Franchisees.
Assist your community
The subsequent must-have, and maybe crucial, is making a stable system and workforce to help your franchise community. A profitable franchisor employs a deep bench that may deal with the calls for of the unique enterprise, in addition to the enterprise of franchising. A standard mistake by founders is believing they will tackle the franchise tasks along with their different duties. Not solely is it impractical from an effectivity standpoint, however franchising requires a completely new set of crucial expertise. These embody, however will not be restricted to, franchisee relations, managing an advert fund, coaching trainers and extra. And along with advertising and marketing to consumers, you may want experience in franchise lead technology or advertising and marketing to potential franchise house owners.
You probably have already got trusted advisors to assist with accounting and authorized issues, however profitable franchising requires advisors or extra hires who perceive the intricacies of franchising from numerous viewpoints: authorized, operational and promotional. This can be a regulated trade that requires franchise-specific experience.
Franchise advisors who’ve labored with quite a few techniques in several industries have useful perception that can assist you keep away from the pitfalls that so usually delay getting a franchise off the bottom. They’ve instruments out there that can assist you decide if this can be a step you are prepared for, and assist you determine and shore up areas the place it’s possible you’ll be weak.
Be certain your numbers add up
So as to entice franchisees, the prices of becoming a member of your franchise system should be aggressive and aligned with the present market, out of your franchise price and royalties to the general buildout and funding within the enterprise. What you are providing should be well worth the value you are charging. This implies the franchisee who can afford the upfront and ongoing prices ought to see a return on their funding in an inexpensive period of time.
Take into account {that a} franchisee will solely earn a living after they pay a royalty to you from product sales. Will your services or products ship the engaging financials that owner-operators or investor teams are searching for?
A rule of thumb is that by the second or third 12 months in enterprise, a franchisee who’s an owner-operator ought to anticipate at the very least 15% ROI and an space developer 20%.
And since we’re talking about cash, are you well-capitalized for this enterprise? Whereas increasing your corporation utilizing different individuals’s cash is a inexpensive technique to develop, franchising requires an funding by the franchisor in each sources and cash. A franchise guide may give you an thought of what these prices might be earlier than you begin the method.
Remaining ideas
Turning into a franchisor is an enormous step. You possibly can construct confidence in your idea and your self by setting the correct expectations, constructing fruitful, collaborative relationships, and assembling a workforce of consultants, all whereas presenting an excellent model.
Franchising your model is an thrilling technique to be a part of forces with different entrepreneurs and franchisees with a typical aim — rising your idea and introducing your model to markets it’s possible you’ll by no means have dreamed of coming into by yourself.
