Opinions expressed by Entrepreneur contributors are their very own.
It is not sufficient to have a fantastic enterprise thought that you simply suppose will be scaled up and replicated as a franchise. Your nice thought should be a confirmed success, with a observe report spanning not less than a yr. The entire thought of shopping for a franchise is that the corporate has figured issues out and made a lot of the errors already, so you do not have to. The McDonald brothers had a profitable new thought for serving hamburgers shortly and inexpensively, however what if they’d simply began franchising their restaurant with out first developing with a constant menu and processes that might succeed anyplace a restaurant was constructed? As a substitute of shopping for franchise rights from the brothers, Ray Kroc may need handed proper by them and appeared for an additional golden alternative.
Not each enterprise goes to go from a profitable unbiased to a thriving franchise. One of the simplest ways to find out if what you are promoting is franchisable is to usher in an skilled third celebration who can meet with the founder and conduct a complete evaluation to guage the enterprise’s viability. Passing that check is step one in a prolonged and detailed course of.
My story could be very completely different from others within the franchise trade; I used to be raised in it. My dad, Roy Titus, began Minuteman Press, and I labored there for years earlier than the 2 of us began Signarama. I used to be 23 years outdated, operating an indication store on Lengthy Island for a yr after which we opened one other location in Florida to show it may work exterior New York. We based Signarama with a plan to start out franchising as soon as we proved the enterprise mannequin labored and realized lots of the teachings wanted to franchise.
Even with all I already knew about franchising, it nonetheless took about three years earlier than we may contemplate Signarama a profitable franchise. Here is a few of what I’ve realized:
Doc every part
Write down how you probably did every part, who was in cost, issues that arose and the way you solved them — something that goes into the operation. This may in the end result in the creation of an proprietor’s guide and coaching agenda.
Do not DIY it. Usher in an skilled government or crew. You’ll need a brand new web site, audited financials, and an understanding of a myriad of points: methods to promote places to franchisees; methods to prepare, arrange, and help them; methods to accumulate royalties and a lot extra. It may be overwhelming in case you do not rent somebody to assist stroll you thru all of it. It could possibly take 90 to 180 days for an out of doors firm to finish the method from begin to end—and a full yr in case you attempt to determine every part out and do it your self. Even then, it is probably not proper.
Know your numbers and your market. As you monitor what you are promoting for franchise potential, ensure you have a robust revenue and loss assertion to indicate. Analysis your rivals and discover out what differentiates you from them. That is one other good motive to work with an skilled crew; they will help with market analysis and assist discover the perfect places on your specialty.
Seek the advice of a certified lawyer
Seek the advice of an lawyer for all authorized paperwork. The required filings are extremely detailed and take lots of time and experience to arrange, particularly if you can be working in a number of states with completely different laws. It is best to rent an expert for necessities just like the franchise disclosure doc, which allows the corporate to function in all of the states the place you need to do enterprise. We get lots of shoppers who’ve had their paperwork carried out by another person, and we have now to right or tweak lots of them. My recommendation is to do it proper the primary time and pay slightly extra to an organization that has carried out it earlier than.
Cash will not be the one object. The value of franchising varies, starting from attorneys who will carry out particular person duties for $15,000 or $20,000 to corporations focusing on it and cost $50,000 to $125,000 for the complete bundle. Do not use value as the one think about whom you rent; “you get what you pay for” applies right here. Parts of the packages additionally range significantly, as some will present new web sites, produce movies, safe emblems and embody different providers of their charges.
Make the dedication
No enterprise runs itself, and that features franchises. Even these owned by the franchisor is not going to run themselves. Both do it 100% or have a supervisor in cost. Franchising is a unique enterprise than the one you are in, regardless that it is likely to be in the identical trade. A full dedication is required. Above all, keep in mind that you’ll solely be pretty much as good as your franchisees. Your buyer will not be the one that comes into considered one of your shops or eating places; it is the individual operating that location. When they’re profitable, you might be profitable.
It is not sufficient to have a fantastic enterprise thought that you simply suppose will be scaled up and replicated as a franchise. Your nice thought should be a confirmed success, with a observe report spanning not less than a yr. The entire thought of shopping for a franchise is that the corporate has figured issues out and made a lot of the errors already, so you do not have to. The McDonald brothers had a profitable new thought for serving hamburgers shortly and inexpensively, however what if they’d simply began franchising their restaurant with out first developing with a constant menu and processes that might succeed anyplace a restaurant was constructed? As a substitute of shopping for franchise rights from the brothers, Ray Kroc may need handed proper by them and appeared for an additional golden alternative.
Not each enterprise goes to go from a profitable unbiased to a thriving franchise. One of the simplest ways to find out if what you are promoting is franchisable is to usher in an skilled third celebration who can meet with the founder and conduct a complete evaluation to guage the enterprise’s viability. Passing that check is step one in a prolonged and detailed course of.
My story could be very completely different from others within the franchise trade; I used to be raised in it. My dad, Roy Titus, began Minuteman Press, and I labored there for years earlier than the 2 of us began Signarama. I used to be 23 years outdated, operating an indication store on Lengthy Island for a yr after which we opened one other location in Florida to show it may work exterior New York. We based Signarama with a plan to start out franchising as soon as we proved the enterprise mannequin labored and realized lots of the teachings wanted to franchise.
The remainder of this text is locked.
Be part of Entrepreneur+ right now for entry.
