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“Evolution is a process of constant branching and expansion” — Stephen Jay Gould
You already have a small business setup, and it’s going strong. Now you want to take it a step further or maybe even more than just a step. How about making a franchise out of your small albeit successful business? After all, without growth or expansion, life would cease to exist. But before you start any franchising, you first have to learn the basics of what franchising really is. Here is a short guide to help you get the know-how of it.
What is Franchising and How It Works
Basically, franchise is another outlet or another store for your business. It could be in the same city or a different one. This is done by selling the rights of the new outlet to somebody else who would continue to use the name and operating system of your business. The best thing about franchising is that all the costs of the project are paid by the person who buys from you and whether there is a loss or profit, the responsibility is with them.
Of course, the most important thing to decide is if your business can even be franchised or not. There are a few things you should consider before you franchise your business.
- First of all, you have to make sure that there is high market value for your type of business. Would it be popular among customers? If not, then whatever you do, it would probably not work. It is recommended that you take the views of a professional who is well acquainted with current market trends. So unless you are absolutely sure that what you do will definitely work, don’t do it.
- The second thing is to ensure that your business has something unique about it. It does not have to be one of a kind but it must contain something that sets it apart. If it’s the same old boring stuff that people are used to, they would not be captivated by your enterprise and all the time and effort you spend will be wasted.
- Thirdly, it is important to know that your work should not be such that it is easily used by another. It has to be able to stand out among others and not be replicated before you get the praise and money for its origination. The quality of your business should be such that it can beat others out off the market.
One more thing that you should do before getting involved in franchising is that you hire a franchise attorney. You don’t want to regret the day that you thought of expansion. Not only would the attorney give you legal advice, he would also make sure that you keep floating and don’t sink on your first attempt.
The Franchise Program
There are many elements to the success of a franchise. They are discussed below:
- The prototype is a real, life-like, prospect of what you actually want to do. It needs to be something that is not only interesting but that can be experienced before it is started. A prototype is made up of the possibilities that your business can have. If you don’t demonstrate an exciting, active thing, you and your team of advisors would never know if the real business even has the potential of surviving, let alone succeeding.
- You can’t just have an idea or mental picture of what you want. You need to have researched the entire thing thoroughly and then have it all planned out on paper before you can start franchising. Otherwise, how would you explain what you want to the person who is bearing your franchising cost? The written procedure is your manual. Have professional technical writers take a look at it first and then approach the next step.
- The concept of your franchise needs a protected trademark. It is the label that refers to the identity of your business. By a protected trademark, it is meant that you develop a trademark that is solely yours. It is singular and not used by anybody else and you claim sole ownership. It has to be registered with the government before you can launch your franchise.
- Don’t forget to get all your legal documents drafted by a professional. The Franchise Disclosure Document (FDD) outlines the business history, your offerings, the financial preparation you have made for franchising, etc. All of these terms and conditions have to be approved by various offices before you are allowed to discuss your proposition with your financer(s).
- Sales tools are also an integral part of franchising. Without your marketing plan, you cannot hope to advance your business venture. Be very careful of how you budget the advertising of your enterprise. Consult professionals so that they can guide you correctly.
Keep all the above tidbits in mind before you start the expansion of your business. It is always advised to seek legal counsel for these things as a layman might not have all the information required. Also, make sure you hire an attorney that deals singularly with your type of business franchising.