How to Franchise My Business

How to Franchise Your Business Effectively.


You have a good see opportunities for growth and expansion....yet you lack the capital, the people and the time to take advantage of the market opportunity ahead.  Franchising could be the alternative to help you build your brand, network, and revenue streams, but how do you franchise your business?  It starts with a solid plan for growth - understanding the marketplace for your business, product, service or offering.....who is out there offering something similar in the franchise marketplace and how can we effectively compete with more established franchise brands?  What should the franchise fee be for the model, the royalty percentage, the territory model and other items that will have an enormous impact all take careful calculation, planning and understanding prior to launching a franchise system.

Strategic Planning - Too often I have worked with anxcious entrepreneurs who see the light at the end of the tunnel and want to sell before they have a program in place.  Do the due diligence, plan the model, build a program structure for both yourself as the franchisor and the buyer/investor or franchisee.  Plan out the business model and be prepared to answer detailed questions about the franchise.  Selling franchises is one of the most difficult and complex sales in the business marketplace, make sure you go into it with the best, most complete and accurate tools possible.

Franchise Legal Structure - franchising is a highly regulated marketplace and requires careful planning and management in order to avoid litigation or legal issues that stem from poorly planned franchise models.  Franchise compliance is managed at two levels, Federal Compliance is managed by the Federal Trade Commission and requires the development of a Franchise Disclosure Document (FDD).  The Federal Trade Commission rules require the use of a properly documented franchise disclosure and also a documented process in how the franchise is presented to the actual buyer.  At the state level, certain states require that your franchise is registered as a franchise with them prior to marketing or even speaking with candidates regarding the sale of a franchise model.  It is imperative that you follow these two levels of franchise legal compliance in order to avoid franchise litigation and the potential liability that arises from selling franchises without franchise registrations in place.

Franchise Operating Manuals and Systems - have a good system in place in order to present value to the franchise buyer.  The ability to sell and develop franchises is directly linked to your ability to build, support and nurture franchisees in their own business once you have brought them into your system.  Have the manuals, documentation and procedures in place that have been proven to work.  Know the data, have the documentation to back it up and understand how to replicate your success.  This is at the core of what makes a company a good franchise or a complete failure.  Take the time, hire the right people and get the documentation in place to produce successful franchise partners.

Franchise Marketing and Sales -

  • The first point to be aware of is that franchise sales and franchise marketing takes a budget.  Yes, that’s right, you do have to advertise to attract good franchise prospects.  What I tell my clients in deciding what to budget for franchise marketing activities is twofold.  Develop a great franchise brochure, some printed materials, a GREAT website and other program pieces that are necessary to attract buyers - have your entire presentation put togehter in a way the presents the opportunity well, accurately and professionally.
  • The second point is take notice of in franchising is that you need to have a compelling story.  I call this the unique selling proposition for a business concept.  What the heck makes you different from every other business out there in the license/franchise/business opportunity world?  If you can’t say something to yourself in the mirror that makes you smile, you’re probably going to have a hard time getting other people to find it interesting.  Develop this value proposition and nail it down before you start talking to people.  Buyers don't offer a long attention span to franchise sales presentations, present a quality product immediately with a strong value proposition and know when to set the hook.
  • The third issue is that if you don’t like making a lot of sales calls and “working the phones”, you need to budget for a sales person to do this for you.  A good franchise sales person will make anywhere from 75-150 phone calls per day.  In many instances, I have personally called a good prospect over 40 times just to get a meeting with them regarding the franchise opportunity.  Get ready to get busy, franchising takes leg work and activity.  I love activity….it’s easy to monitor and 99 out of 100 times, the sales people who create the most activity are the ones who close deals.  Burn up the phones and have measureable metrics in place for your franchise sales team and you will see revenue in your franchise system.
  • The fourth note is that it’s okay to be aggressive and tell the franchise buyer what you are good at and how it will benefit them!  The thing I love about franchising is that it helps people become entrepreneurs, which is the most empowering thing in the world.  The thing I hate about franchising, is that the people you are dealing with are not business owners and have not been empowered yet!  So it is up to you as a franchise sales person….or franchise consultant, to lead that person through the decision making process.  My most effective sales interactions with franchise buyers have happened in cases where my sales pitch turned into a counseling session and helped the franchise buyer truly connect with my clients franchise.  I found out more about the buyers on the first call, I made compelling comments about things other than what I was selling and I really personalized the relationship.  The next time you call someone, try this and see what kinds of results you get!  Franchise sales cycles typically take 90 days up to a year in time to close the transaction, don't push for a close too soon in the process and let the relationship develop.

In 2012, Franchise Marketing Systems clients sold 603 franchises.  The process of franchising a business can work exceptionally well, given the right systems, brand, industry and leadership.  Contact us for a consultation to discover whether your business is ready for growth through franchising.  

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