For businesses that choose to take the route of franchise expansion in order to grow their market share and expand the operations of their company, the first phase is to organize and structure a well thought out business plan for the franchise expansion program.
Typically, this should be done with the guidance of a franchise consultant or franchise consulting firm who has the specific expertise in putting together franchise programs. If not, the business plan should cover the following elements of a franchise program in order to fully and accurately plan the franchise program.
1. Develop a Solid and Complete vision and mission statement for the company. As entrepreneurs, we many times are too busy to focus on things like a vision statement for the brand you work so feverishly on every day. Without focus, you could be working harder, not smarter. Develop a defined and realistic position for your company and your franchise organization.
2. Know and understand your competition. In the franchise industry, your competition may change from who you know in the consumer marketplace. For example, a commercial cleaning business does not compete with a restoration company on the consumer level, but when they begin to offer franchises, potential franchisees will certainly consider both as options to buy. Develop a strong value proposition and be ready for questions as to how you stack up against each competitor.
3. Develop a fee structure for the franchise that works. Too often, franchisors base their entire pricing decision on what other franchises are selling their model for. The process to determine franchise fees, royalties, advertising cooperatives and other key figures should be based on a planned process. Starting a franchise system takes planning and a thorough understanding of what will be required to train and support franchisees.
4. Develop a solid cash flow analysis and plan for how the franchise system will build and what costs will be involved in supporting the franchise growth. Although franchising can be extremely profitable, there are layers of management and support that are needed in order to continue to add value to franchise partners.
5. Organize your company in order to protect your current business along with trademarks, intellectual property and other assets from potential liability that comes with rapid franchise expansion.
For help developing your franchise business, contact us - (800) 610-0292.