Is Your Business Ready for Franchising?
At its historical core – franchising is a method of distributing products or services. Today, business format franchising is predominately the franchise expansion method utilized by companies seeking to expand through franchising. To get a clearer picture of business format franchising, think of SUBWAY® Restaurants and how every location is nearly identical in its food offerings, operations, signage, and feel.
6 questions to help you determine your business franchisability:
- Does Your Business Produce Profits? – Does your business provide adequate returns? Does it have enough profitability to provide a good return to a franchisee and still pay a royalty, marketing fees, and other items? Great franchise brands provide strong financial returns to the franchisee and franchisor. The bottom line: Without unit profits, there are no pennies available for a franchisor!
- Do You Have a Successful Operating Prototype? – Is it a proven business offering? Have you been in business for reasonable period of time, and/or do you have multiple locations that consistently generate reasonable returns? Franchising is a serious endeavor, and you must have a solid foundation in place first.
- Can the Knowledge be Transferred? – Is your business dependent solely upon you, or do you have a team in place? Can the business knowledge be trained to someone new (franchisee), or are there specific skill-sets required to operate?
- Is Your Business a Trend-Setter? – Does you business have sustainability, or are there dangers of a trend/fad involved? Fad trends can be short-lived. Growing a great franchise takes sustainability.
- Can Your Business be Scaled? – Will the business be easy to replicate? Or is it contingent upon certain real estate conditions, or markets? Is the business easy to operate? Can it be designed to offer multiple locations to a franchisee?
- Do You Have The Financial Means? – Franchising costs money. Do you have adequate financial resources available to develop the franchise and roll-out a strong sustainable marketing program? Can your existing locations finance you through the growth of the franchise?
The 3 Phases of Creating a Franchise System
Phase 1 – Blueprinting Your Franchise Brand
A strategic franchise plan, (brand blueprint) is the most important step in building a new franchise company and it should not be rushed. Much like building a house; you wouldn’t start nailing things together until you had a drawing of what it will look like when it is finished. A franchise plan provides you the vision of what your brand will look like when it is done, and what it will take to grow it.
Many new franchisors and large corporations make the key mistake of starting with the legal and marketing aspects of the franchise before they completely understand how the system could or should operate. The legal documents and franchise marketing materials are necessary to sell franchises and grow your system, but they should be developed after you have determined, through successfully running proof-of-concept units, that franchising your concept is feasible and you have a solid strategy with which do it.
Franchising is an alternative distribution system for existing products and services and must be thought of and planned for accordingly. There are too many options that must be fleshed out before any money is paid to a reputable law firm to create a Franchise Disclosure Document (FDD).
Many factors need to be considered when developing a strategic franchise plan including a feasibility study, unit replication and opening requirements, unit support requirements, training needs, franchise expansion models, royalty structures, advertising and marketing, infrastructure needs, information systems analysis, real estate, supply chain management, internal and external SWOT (Strength, Weakness, Opportunity, Threat) analyses, competitive analysis and benchmarking, intellectual property protection, franchisee profiling, financial modeling, corporate structure, and much more.
After a thorough analysis of your concept is completed, we compile the information into a comprehensive, strategic, franchise-business plan which is then distilled to a shorter, executive, strategic-franchise plan that is less than ten pages long. This will serve as your foundation and roadmap to creating and growing your system.
Phase 2 – Initial Concept Creation and Development
Armed with the franchise brand blueprint, we are now ready to begin the hard work to pull it all together. Much of your strategic planning session ideas will become projects, taking on lives of their own.
Depending on the complexity of your franchise concept, the items on your project list could be quite lengthy. No two concepts are the same so the project lists will always vary, but there are core elements that must be developed for any franchise company.
The following list represents many of the items that must be addressed and complete prior to launching your new franchise system.
- Franchise Operations & Other Required Manuals
- New Franchisee Training Agenda & Materials
- Determining Legal Counsel (FDD & Trademark Filing)
- Franchise Disclosure Document (FDD)
- Franchisee Support Systems
- Franchisee Intranet & Communications
- Store/Unit Information Systems (POS)
- Real Estate Selection
- Suppliers & Purchasing
- Construction Plans & Options
- Store Signage
- Store Load Out & Merchandising
- Websites, eCommerce, & Internet Marketing Strategies
- Quality Assurance
- Franchisee Field Support
- Franchisee Marketing & Advertising
- Public Relations
- New Franchisee Marketing Materials
- Franchise Compliance & Policies
- Franchisee Relations & Policies
- New Franchisee Profile
- Internal Staff Franchise Training
- System Metrics & Management
- New Franchisee Recruiting Process
Note: Core franchising elements listed only.
Phase 3 – Initial Growing of the System
Ready… Set… Now what do you do?
So you’ve managed to get your franchise concept ready for launch and are now wondering where all the buyers are – right?
Most new franchisors head straight to the Internet and start spending big bucks on franchise advertising portals. Unfortunately many new franchisors blow their entire advertising budget on randomly picked portals and have zero results to show for it. In some instances, new franchise companies hit their cash-zero date before they sold any franchises.
Franchise development has become a science and to avoid this problem – we will work with you to blueprint a strong Franchise Sales Program Strategy:
- Determining Realistic Brand Growth Sales Goals
- Assessing and Understanding Your New Franchisee Recruiting Profile
- Assessing Existing Franchisee Validation (Secret Shopping Franchisees)
- Assessing Franchise Sales Staff (Secret Shopping Your Salespeople)
- Creation of a Recruiting Blueprint (Franchise Sales Process)
- Developing Your Brand DNA (Brand Value Proposition)
- Assistance with Lead Generation Budget & Plan
- Reviewing & Determining Lead Generation Sources
- Reviewing & Development of a Great Franchise Website (High Lead Conversion)
- Franchise Sales Social Media Integration
- Assessment of Franchise Sales Marketing Materials
- Development or Refining a Lead Qualification Procedure
- Reviewing & Determining In-Store Brand Discovery Presentations and Materials
- Specialized Franchise Sales Training for Staff – Including Role Playing
- Determine Recruiting Metrics and Pipeline Management (Measuring Your Results)
- Assessing Recruiting Technology Platforms (CRM)
Learn More About Our Experience
Listen to Lonnie Helgerson’s interview below by Sandra Hart, the BNI Global Director of Ireland for promoting his upcoming keynote address at their International Directors meeting in Las Vegas, NV. With over 200,000 members in 7,500 plus chapters worldwide, BNI® is the world’s leading referral organization.
Contact us for a free no-obligation consultation on franchising your business!