You opened your first business, and have been so successful for a number of years. You are looking to scale your business and reach more of your consumers you know are out there. At this point, you should be considering franchising your business. Allowing others to buy the rights to your business and open locations and build brand awareness. What will you need to begin this journey?
1. Proven Successful Business
First, you will need a proven successful business. To gain potential franchisees, you will need to show that your business is profitable to assure the franchisee of their financial decision to commit to your company. This should be over an extended period of time, not just a get rich quick method.
2. Business Plan
Second is the business plan. You will need a packaged business plan for the franchisees to look over during the process. The business plan will describe how the company will make money, the goal of every franchisee. Building a business plan will take some time and thought, while it will hopefully be aligned with your current strategy you will need to think in terms of scaling your business. This may mean adjusting your business strategy and determining what strategies will carry throughout the business and what will need to change.
3. Audited Financial Statements
Third, you will need to disclose your audited financial statements. Franchisees will need to know how much you are spending and where. Are you spending most of your cash on marketing efforts, or hiring? Depending on the type of franchise, you will want to show cost versus sales in a reassuring fashion.
4. Franchise Disclosure Document
Fourth is the Franchise disclosure document, a legal document which will release thorough information about the franchise and the franchisor company to present the potential franchisee with enough information to make an informed investment. The 23 categories of the document include but are not limited to fees of the business, dispute resolutions, and restrictions of the franchise.
5. Operations Manual
Fifth, the operations manual, how will the franchisee run the business? Consistencies across franchises are important, what measures will you take to ensure of this? This could be everything from décor to hiring processes.
6. Franchise Management Staff
Finally, you will need to hire a staff to accomplish these goals, you won’t be able to do this alone. You will need to hire a team to take over selling to the franchisees, help them get the business up and running, and administering the franchise business plan.