As well as preparing your business for franchising, you need to prepare yourself. To opt-out contact us at [email protected] or (708) 957-2300, or click here. As you prepare to become a franchisor, you'll usually need to add several staff members who will focus solely on helping franchisees. Solar Universe has sold 14 territories since qualifying as a franchisor in January 2008. In January, for instance, three established franchisors filed for bankruptcy protection: Taco Del Mar Franchising Corp., Uno Restaurant Holdings Corp., and Daphne's Greek Café. Similarly, if you're planning to expand your business, a well-managed franchising … If you’re running a successful small business and have ambitions to grow, you have several options. If you’re concerned about doing it right and avoiding missteps, you’re not alone – we’re here to help. Now that you're in business as a franchisor, one of your most pressing activities will be to find franchisees and convince them to buy your concept. Read more on the importance of having outside independent franchise legal counsel). If not, give our input some … Request a free video on how to franchise your business, and we'll have the right franchise consultant contact you. If you and your concept are quality candidates for franchising, we’ll work to uncover and discover that truth. Find out why franchising may be the right path for you. "Trust that you're going to need a lot of money for marketing," he says. When the right concept is franchised effectively, it can be a great expansion strategy that doesn't require as much up-front capital as growing through company-owned units. Lillians now has a full-time staff of seven. Inadequate training can leave your franchisees ill-equipped to implement your system successfully. Other options might be partnerships, private or public growth as a corporate owned chain, business opportunities, or distributorships, among other choices. Then, quit your job, give up your security and benefits, and go into a business you've never been in before. The first question to ask is whether your business is suited to being franchised. Go over your personal finances and assets so you can start looking for opportunities in line with your price range. Other common sales techniques include attending franchise fairs or hiring independent franchise marketing firms to help locate investors. Just because you qualify to sell franchises doesn't mean you will find buyers. While becoming a franchisor can require considerable expense, the capital required to grow a network of franchised locations is far less for you than achieving the same number of company-owned locations. A franchisor needs certain new capabilities and will need to be sure that these capabilities are seamlessly integrated into existing organizational functionality. The franchisor will also need to maintain ongoing compliance (keeping registrations in force while actively selling) and will need to be able to document compliance with state and federal law on an ongoing basis. If you're considering franchising your business, know that the process of becoming a franchisor is usually long and involves considerable cost. You will make money from an initial fee (franchise … Your sales are boosted more than you can even imagine. Lillians is unusual in that the company has sold all its franchises by word of mouth and doesn't have a sales representative. FRANCHISE OPERATIONS MANUALS & TRAINING PROGRAMS. Making it so that someone (a franchisee), who is interested in operating your same business in their own market, can do so. If we can be of assistance, please contact us: [email protected] | (708) 957-2300. Without ongoing training, it's pretty easy to institutionalize wrong behaviors.". Franchising: A Path to Your Future People go into business by way of two paths. 2. Cleveland-based franchise consultant Joel Libava says he likes to see companies with at least a couple of profitable units beyond the first one already in operation before a company tries franchising. Allow at least 6 months and an initial investment of between $25,000 and $35,000. Don't rely on your gut feeling that your business would be a smash hit across the country. A franchise business is a business in which the owners, or “franchisors”, sell the rights to their business logo, name, and model to third party retail outlets, owned by independent, third party operators, called “franchisees”. These legal requirements are relatively easily met through the use of an attorney with substantial franchise experience. Your training programs and other support efforts will create quality control, notes Siebert, making sure the brand provides a uniform experience no matter which unit customers visit. Franchising your business just like every other strategy or plan in business has brighter sides as well as darker sides. And you've signed a 10-year contract.". "Ask youself, is the concept salable?" Call us today at 708-957-2300 to see how we can help franchise your business. Solar Universe spent nearly $1 million preparing to franchise, Bono says, including $150,000 to create a state-of-the-art training center for franchisees complete with indoor roofs where they can practice installations. Put another way, franchising a business is simply a method for growing a particular business or brand. Marketing encompasses everything from radio or print ads to uniforms, logos, fliers, and logo art on company vans. The business model should be presented to the potential franchisees. The company has also entered into a partnership with the national franchise-consulting chain FranNet, whose consultants may present the company to their prospects. You can choose to go it alone, or with the support of a results-driven business model. (Companies seriously considering franchising are well advised to seek the counsel of a knowledgeable franchise professional prior to initiating any franchise efforts. Franchising allows a business to operate under the established brand of another business. Be careful to note whether geographic variables such as weather or local laws may affect franchisees' success. As you prepare your legal paperwork, you'll need to make many decisions about how you'll operate as a franchisor. iFranchise Group is continually working to improve website accessibility. How does it work? Still, many business owners dream of seeing their brand become a household name, with a network of franchisees from coast to coast or around the globe. Franchises are an extremely common way of doing business. Franchisor Cindy Deuser, 51, co-founder of five-year-old franchisor Lillians Shoppes, says the rule binder her home state of Minnesota provided was two inches thick. There's also a lot of legal paperwork to wade through to make sure your business complies with federal and state laws that regulate the franchise industry. In the case of Solar Universe, the company sells its franchisees the solar panels they use, so founder Bono says he needed a full-time hire to staff the order desk. There should be an expectation that more units will create economies of scale and increase profits. The franchisor should also develop training programs for use in conjunction with the operations manual. Lillians' Deuser says she and her sister/partner Sue Olmscheid, 45, ran many business-model scenarios with their franchise attorney before settling on their $25,000 franchise fee, 7-1/2 percent royalty and 10-year contract term. Franchising Definition: The term ‘franchise‘ is understood as an exclusive right conferred by the parent organisation to an individual or enterprise to use the former’s successful business model, in stipulated areas.Franchising is a business relationship; wherein the owner authorises another party to use their brand, product, business system and process in return for adequate consideration. UNC Press Books, 1992. International Franchise Association. If you have a small business that can be easily replicated, then franchising may be one of the best ways to expand it at a fast pace. When you submit it, be prepared for authorities to critique the document and possibly demand additional disclosures before they approve your application. The first thing you should know is that there is always an upfront franchise fee, and franchisors often have financial requirements for whom they’ll allow to open one of their franchises. The founding sisters still do all the buying for the growing chain, but Deuser says growth means they are already looking into hiring a second trainer. Franchising your business allows you to have customers all around the world. Territory size is important too, as too-large territories may have to be bought back later at a premium so they can be split up, notes IFA's Shay. Other considerations include staffing resources and the proposed franchising support system. They also are part of branding efforts. Altogether, a new franchisor can anticipate that the franchise program should take between six months and a year to fully implement. These questions can only be answered after evaluating your business and determining how franchising fits with your specific goals and objectives. LEGAL DOCUMENTS. Just because your five-month-old Mexican restaurant is selling out every night doesn’t mean it’s time to think about franchising. With the Internet, this has increasingly come to mean providing ongoing online learning modules for franchisees to use. he says. Franchising is a more risk-free business endeavor for newbie entrepreneurs because they don’t need to build a brand and an audience. But here - at the point where you begin supporting your franchisee network - is where a chain ultimately succeeds or fails. "Franchising in America: The Development of a Business Method, 1840-1980," Page 119. The first step in determining whether or how to franchise a business involves two key questions: 1. View a full list of franchise consulting services we offer, or contact us to learn more. It also can cost $100,000 or more, so ask yourself if your company has the financial resources. The iFranchise Group provides all of the franchise consulting services listed below, and can customize a program to meet your specific needs and budget. Beyond the federal FDD requirements, some states have their own rules for selling franchises within their borders. To help stimulate interest, the company offers a $1,000 referral fee to anyone who sends the company a new franchisee. In the FDD, you'll be asked to provide a wide range of information about your business, including audited financial statements, an operating manual for franchisees, and descriptions of the management team's business experience. Franchising your business is a proven route to rapid growth. A franchisee can spend the time dedicated to building a strong business unit, marketing, finding a site, negotiating a lease, hiring and training staff, and so on without worrying about how other locations are faring. Step One: Step One: Evaluate if Your Business is Ready, Step Three: Make Important Decisions About Your Model, Step Four: Create Needed Paperwork and Register as a Franchisor, The size territory you will award each franchisee, What geographic area you are willing to offer, The type and length of training program you will offer, Whether franchisees must buy products or equipment from your company, Whether you want an owner-operator for each unit or area/master franchisees who will develop multiple units. You might be considering franchising as a result of your own research into expansion options for your business, or (as is often the case) you might be considering franchising because you have been approached by others who are interested in buying a franchise of your business. As a franchisor, you'll have gone through a lot to reach this point. Is this business franchisable? The initial investment is a once-off fee. Franchising arises when a franchisor grants a licence (franchise) to another business (franchisee) to allow it trade using the brand / business format. Yeah, you need to be careful about them but work hard for the brighter sides. Know your budget. "But five years later, when you have 100 franchises sold, and they each make $700,000 a year, that's a $7 million annual mistake. Another benefit of getting a franchise is usually the company provides franchisees with the equipment and the products needed to … "It took longer than we thought, and was very intense in terms of all the things you have to cover," she says. "Ask yourself if you're comfortable having a role as a teacher and salesperson, selling and supporting franchisees," Siebert says, "as opposed to going out there and doing it yourself.".
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