If you think your business might be franchisable then you will need to offer Franchisees a business format which includes you brand business system, training, opening assistance, marketing and support services under the contractual terms of a franchise agreement which will, amongst many other things, set out the financial arrangement. Considerable development work is required before you will be in a position to draw up offer documents and begin recruiting Franchisees.
The principal benefit, which Franchisors hold out to prospective Franchisees, is the opportunity to run a business which has already proved its capacity to deliver products or services profitably to an identified market. You cannot sell an idea as a franchise. You must have proven in practice that the idea works and that you can successfully transfer the “know how” to another person operating at “arm’s length” from you.
You will need to draw up a comprehensive operation manual that details what a franchise does, how to do it, and to what performance and quality standards. The manual will need to cover the setting up phase as well as continuing operation. You will also need to develop an initial and continuing training program that ensures that the “know how” contained in the operations manual can be transferred successfully to a third party within the time available. The work involved in proving and documenting your operating and training systems is extensive and ordinarily calls for highly skilled and experienced advice.
Every Franchisor needs at least one outlet which we call the prototype, where Franchisor can test operational systems, controls, décor, designs, layouts, equipment, training methods, advertising and marketing programs, products and services, job requirements and descriptions, financial models, etc. The prototype is a laboratory at which problem areas can be identified, enabling the company to develop solutions and truly see if the business can be franchised. Before franchising, a company should have been operating outlets successfully at least at one, and preferably several, locations to verify the viability of the business and its profitability.
The business to be franchised must be capable of producing a reasonable return on the Franchisee’s investment, after deducting the value of the Franchisee’s labor. If Franchisee is merely buying a job, his motivation and loyalty to the network may be short lived. The business must also be able to generate sufficient revenue to the Franchisor.
Important is that you have the Franchise Development done by a professional Consultant who knows his craft by heart not just by copying from the internet or to steal from us professionals. We expanded our Company portfolios to help more Companies enter into Franchising. For the past 20 years we offer complete comprehensive and detailed franchise development under RK Franchise Consultancy and February 2020 we launched in addition GOFRAN Consulting, which is a Consultancy firm for clients who do not want or need a full packaged development but may avail only of certain services of the consultancy (you can see the 2 pages of Gofran services in this magazine).