By Natalie Veli
If you have a developed business that you feel could be easily replicated, franchising may be right for you. When the right concept is franchised correctly, it can be a great expansion strategy for your business to become a household name. Here are 4 steps that can be followed to franchise your business.
Step 1: The Feasibility test – Is your business ‘franchiseable’?
It is important that you first establish that you believe that your business will be capable of being franchised before proceeding to develop and agree on expanding.
The methodology used to undertake this assessment would include understanding the proposed business model to be replicated. You can start off by:
- Conducting interviews with the management team to understand their views of franchising and what they perceive as challenges
- Reviewing the documentation that you have available to determine the extent to which your business is standardised
- Reviewing your financial performance, only a profitable business can be franchised
- Going on site to document your operations and how things work
These actions will allow you to gather the following information and review your business in order to develop a franchise value proposition
- Product and service range
- Pricing and competitiveness
- Unique value proposition
- Skills needed to run the business
- Systems needed to run the business
- Financial model
- Current infrastructure and potential corporate structure needed to support franchisees
- Marketing and branding
- Supplier and other relationships
- Staff training programmes
Step 2: Develop an expansion plan
Based on the information you’ve gathered from reviewing your business and its franchise feasibility, you could begin working on your expansion plan. The objective is to brainstorm the results of the business review and to formulate a practical expansion (action plan) for the structuring, development and further replication/expansion of the business.
You should sit with your management team to develop an appropriate franchise ownership model applicable to your business. Franchising could be right for your business but after a review, some teams may find that a Joint-Venture or Multi-Unit Ownership would work better.
After your review, any gaps that are discovered would need to be attended to, to ensure franchise readiness.
Financially, the business needs to be financially viable for both you, the franchisor and for the potential franchisee.
This expansion plan should describe the following:
- Determine the ideal expansion format
- The value proposition for the franchisee
- Finalisation of the franchise fee structure
- Discussion on franchise documentation to be developed
- Franchisee needs
- Franchise support
- Franchise training
- Principles of a geographical expansion plan
- The fine-tuning of the owner-operator profile – the ideal owner operator/franchisee
- Marketing of the franchise opportunity
- Design of pro-active recruitment and selection process
Step 3: Implementation of the Expansion Plan
Once the expansion plan has been finalised, the franchisor needs to project manage to ensure that management and support staff implement the expansion plan. The following should take place:
- Training for key personnel on the most important aspects of franchising
- Advice and liaison with industry experts in the development of franchise documentation that complies with the Consumer Protection Act (CPA) where required.
The franchise documents would include the following:
A Disclosure document contains highly confidential information pertaining to the franchise offer, this is similar to a prospectus. This legal document must be given to qualified prospects before a binding agreement can be entered into by the CPA.
The franchise agreement is a legal document governing the entire relationship between a franchisor and a Franchisee. A consultant will assist to develop a briefing document for an attorney.
A franchise operations manual is the primary document that governs the day to day franchise procedures and operational requirements. The manual should specify, in detail, the procedures with which franchisees should comply in order to operate their franchise business.
- Marketing of the franchise opportunity through an online franchise portal
- Franchisee recruitment
- Identifying training courses for franchisees and franchise support staff
- Present the concept to commercial banks and/or funders
- Mentor and monitor the Franchise Management Team and the progress of the franchise development according to the expansion plan.
Step 4: Franchise your business!
Once the business expansion plan is completed and successfully implemented, your business is ready for expansion! At Franchising Plus, not only can we assist and guide you in the full process, but we can offer the following ongoing services to assist your expanded business.
- E-Test – franchisee psychometric test – Franchising Plus developed a profile on the ideal franchisee and conducts psychometric assessments to measure candidates against this profile. Our psychometric assessment is a tool developed by specialists in this arena, namely SHL. Detailed result reports are provided on each candidate.
- Franchisee Recruitment service – Franchising Plus could provide assistance with activities and documentation to assist with franchisee recruitment process.
- Training Courses– Our training courses can include the following and more:
- Basic Business Skills for franchisees
- Franchisee performance management: Coaching for success
- Finance for non-financial people
- Head office staff training on the principles of franchising
- Franchise reviews, satisfaction surveys, periodic reviews of documentation and assistance with the establishment of a franchisee council (where required). Please see our other services and products here
For more information on how Franchising Plus can assist you in the franchising process