How to Prepare to Franchise Your Business
You’re thinking about franchising your business – whether it’s today, a year from now, or 3 years from now, here’s what you need to focus on right now to prepare to franchise.
1. Your Brand: Protect Your Trademark
Your brand is the identification of your business including your business name and unique logo. Part of franchising is that you will be granting a license of your trademark to franchisees. So, having your business name and logo protected with the United States Patent and Trademark Office (USPTO) is critical.
One of the biggest obstacles we come across is successful business owners who are ready to franchise, but their name cannot be protected. This happens if someone already registered the name before them or has prior use of the name.
It’s also important to have your brand aligned. Whether it’s your logo, a vehicle wrap, outdoor signage, it should all be consistent and legally protected.
2. Unit Level Economics: Make Sure Franchisees Are Set Up for Profitability
If you want to franchise your business, we’re under the assumption that you’re profitable. Can your business also translate to profitability for your franchisees? A good place to start is to focus on your gross sales and predict what franchisee’s gross sales will be as they open new locations plus pay royalties.
Another metric to look at is operating profits. What are your product costs, food costs, and labor costs? How does that translate to franchisees? Do a deep dive into your metrics. For example, for service based businesses, what percentage of your customer base are repeat customers? What’s the average sale per customer?
Always take a look at your unit level economics from the perspective of your franchisees and how they can be profitable.
3. Operations: Document Them and Make Systems More Efficient
Start documenting your business operations to help develop your Operations Manual including how to develop a location, day-to-day operations, marketing, and everything that you’re already doing. Try to build better systems around them and document them.
Remember, when you onboard franchisees, success is going to depend on initial training, ongoing support, and giving them the procedures and tools to operate their business.
4. Your Vision: Make sure your Long Term Goal Includes Building an Organization
This has everything to do with you as a founder and your leadership team. Winning at franchising is a process and setting up a 5 year success plan. Part of your vision should be to grow as an organization. You and your team will go from running your business to running an entire franchise organization including marketing, franchise sales, and franchisee support and training.
Watch the video below to learn more.
Sometimes the decision to franchise now may be the answer. You may have great unit level economics. Or, you might be in a hot category. When you franchise, it’s not going to be perfect at first. It’s going to start slow. You’re going to over support those first franchisees and you’ll also be learning and building out more efficient systems to streamline your operations. Franchising is not a destination, it’s a process.
By admin September 2, 2021
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