ENTERING A NEW BUSINESS -
The bad news is a company planning to franchise must realize it is entering a new business, offering an entirely different service (training & support) to entirely new customers (business owner-operators). This new business requires different skills, abilities and expertise. In the new business of franchising, it is critical to develop effective evaluation, documentation, mentoring, training and consulting skills.

THE FRANCHISE FEASIBILITY
An indispensable step before any franchise a business development program gets underway is an analysis of the concept and business model. Has the concept been sufficiently proven in the marketplace? How profitable are existing prototypes or company-owned outlets? Franchising will not solve existing problems, it will only intensify them. Franchising is not a way to raise capital, get rich quickly or expand a business with existing problems. There must be sufficient profitability in the business model so that royalty and other payments can be made and leave the franchise owner with a sufficient profit.

FRANCHISE STRATEGIC PLANNING
A successful franchise development program begins with a solid plan – a foundation for franchising. Often there is little or no strategic planning with new companies entering the franchise industry. T More important than a business plan is a strategic plan – a vision of the franchise program together with a limited number of concrete, achievable action steps.

FRANCHISE DOCUMENTATION
If your company made doing a good job at the planning stage its number one priority, franchise documentation goals will be apparent. Proprietary assets (like recipes, formulas, methods, branding, operating techniques and customer information) need to be identified and protected. A catchy and appropriate name, logo and tag lines are registered as trademarks or service marks.

A franchise operations manual and franchise training program are developed, often from scratch, to impart business day-to-day operating skills to franchise owners as well as ensure uniformity of products and services. The franchise operations manual and training program curriculum must be drafted or edited with a particular focus. Certain topics, chapters and policies used in manuals for company-owned locations, for example, are entirely inappropriate in a franchise environment, creating significant franchise liability issues.

Finally, and only after all of the above are underway, a Franchise Disclosure Document (FDD), similar to a securities prospectus

, is prepared by a competent franchise attorney. Doing it correctly and with a balanced, fair perspective can save going to the courtroom later. Using a boilerplate or online FDD template will almost certainly guarantee a visit to the courtroom down the road. Since these visits cost hundreds of thousands of dollars and up, they are not cheap and far out weigh the cost of doing it right to begin with.

Training the Franchise Management Team -
When the documentation phase is over, momentum gathers as the exciting implementation phase begins. This is where the sparks begin to fly as franchises are sold, new franchise owners are taught and trained, and opening assistance is provided. It’s also when most new franchise companies make serious mistakes that haunt them for years or even decades to come.

The reason: most new start-up franchise management teams have not been trained in how to properly operate their new business, nor can they afford to hire a six-figure, salaried person with franchise management experience. A more practical solution: provide new franchise companies with in-depth franchise training instructional workshops as well as on-going, as-needed advice based.
Tags: How to franchise, Franchise My Business, Starting a Franchise
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The second barrier that hinders expansion is finding and retaining good managers. Very often, a business owner spends months looking for and training a new manager only to see that manager leave-or worse yet, get hired away by a competitor. Franchising helps to overcome many of these problems because it substitutes a motivated franchisee for a manager. Since the franchisee has both an investment in the unit and a stake in the profits, unit performance will often improve. And since a franchisor’s income is based on the franchisee’s gross sales-and not profitability, monitoring unit-level expenses becomes significantly less cumbersome.

Simply opening another location in comparison to franchising takes a lot of time and effort as you have to look for sites and negotiate leases, secure financing, arrange for design, and hire and train staff, plus purchase equipment and inventory. The end result is that the number of locations that you can open in any given period of time is limited by the amount of time it takes to do it properly. For companies with too little time, franchising is often the fastest way to grow. That’s because it’s the franchisee that performs most of these tasks. The franchisor provides the guidance, of course, but the franchisee does the physical work. So franchising not only allows the franchisor financial leverage, but it allows him to leverage his resources as well.

Maybe you have been considering franchising your business but don’t even know if that is a viable option. If your business meets some basic characteristics then it can be franchised. Does your company have experienced management with a track record that is proven over time? Is your business adequately different from its competitors and is it marketable as a business opportunity? Could someone learn to operate your business in three months or less? Are the systems in place and are operating procedures documented? Does your business provide an adequate return? If your business meets these criteria, then it may be a good candidate for franchising.

Every new franchisor quickly learns that once they start franchising they’ve entered a completely different business. Regardless of how you make money as a franchisor, you’ll have two roles: selling franchises and servicing franchisees. And of the two, ensuring the success of your franchisees is the most important. The key to success in franchising is successful franchisees. Without successful franchisees, no franchise system will last.