Creating Your Own Franchise
If you are looking to rapidly expand your existing business, then franchising is a viable and smart option. This works especially well if you have a business model that can be easily replicated. Franchises represent a commercial and legal relationship between an owner of a trade name, service mark, advertising symbol, or trade mark, and a person or a group planning to incorporate that identification into their business.
Simply put, a franchisor is the owner of a trademark or name that he can sell as a right to a franchisee. This is called product/trade name franchising. There’s a complex form also, called business format franchising that includes a deeper relationship between the concerned parties. This type of franchising provides extensive services like training, marketing plans, product supply, obtaining finance, and selection.
Can your business be franchised successfully?
The following points will give you an idea on whether your business can be a success as a franchise:
- Very few businesses are actually franchisable. For a successful franchise, your business has to come up with a superior service or product that strikes a chord among the potential business owners. This is important, as you need to convince prospective buyers that your franchise is indeed worth the effort.
- The concept of your business should be fairly easy to teach and share. When operating a business that only you have knowledge about, you have an uphill task of franchising it. You should make detailed manuals to explain the procedures for the different aspects of your business. Effective franchisors also create detailed training programs for employees, owners, and managers.
- The business must be easily replicable to become a success. The business plan should be one that can work in a number of different locations, otherwise, it isn’t franchisable. You have to be able to systemize the whole business and document its working. Doing this ensures that the processes involved in the operations can be followed by others too.
- Be prepared for the various legal and regulatory obstacles bound to come in the way of your franchise. The federal and state governments may have certain requirements that you have to fulfill to have franchises set up in the concerned area. After you have started franchising, some local governments may actively examine and oversee you and your partners’ business relationship, by limiting renewal or transfer of the franchises, or by keeping an eye on territorial rights.
Financing the franchise
Franchising is more expensive than other forms of business. So before going through with your plan, first validate its effectiveness in generating profit. If it is indeed viable, then you have to arrange for a large amount of cash to finance the initial setup. Other costs will be the ones incurred in marketing your products or services, paying accountants, training employees, running advertisements, creating manuals, and so forth.
Franchising is a very exciting business avenue that allows you to get into the big leagues in a short time. If your business has the right ingredients and is based on the right plans, then you can easily sell it to others looking to operate a franchise in your name.