Are You Ready to Franchise Your Business? 5 Questions to Ask

Franchise Your Business
Are You Ready to Franchise Your Business?

You have a business and want to expand.  There are a variety of ways to expand the number of locations, company-owned, bringing on partners, venture capital or franchising. Many businesses decide that franchising could be an extremely effective way to develop a brand and business model without the intensive capital or staffing needs of other channels. But how do you know your business is ready to franchise and how do you know when is the right time to franchise your business?

Here are some questions to ask if you’re seriously considering whether to franchise your business or not:

  1. Is your business currently successful and how do you define that success?
  2. Why is your business successful?
  3. Can you afford to franchise?
  4. Can you sell your franchise business concept to entrepreneurs?
  5. Are you ready to provide the systems to franchise owners for long-term success?

1. Is your business currently successful and how do you define that success?

If you want to entice entrepreneurs to invest in your brand, it must have a track record of solid revenue growth, dependable profit margins, and a strong customer/client base. Your business may be ready to franchise if the business has credibility based on current success.

2. Why is your business successful?

Can that success be achieved in other locations in volume? The success must be due to factors that can be replicated and easily taught to others.

For example, if your successful concept is based on a service that’s in high demand and isn’t widely available, your business may be ready to franchise if prospective owners can learn how to run your business model.

But if the reason your business is successful is due to being located in one hot market or having unique skills that make you best suited for success, you may not be able to replicate that success.

3. Can you afford to franchise?

You may be ready to franchise your business if you have the capital to put the necessary franchise infrastructure in place. You’ll need to hire attorneys to provide legal support and all the necessary documentation. You’ll need to set up training, operations, and marketing systems. You’ll need to cover the cost of state registration fees.

You may hire franchise consultants. The cost to the franchise can range from $15,000 to $100,00 depending on the business.

4. Can you sell your franchise business concept to entrepreneurs?

How will you convince anyone to spend the money necessary to open a location for your brand?

You’ll need to market your business to prospective owners and sell them your concept. You may be ready to franchise if you can make the argument that between the franchise systems you’ve put into place and the prospect of customer/client demand and revenue, your business will be a success for anyone willing to take a risk.

5. Are you ready to provide the systems to franchise owners for long-term success?

If you’re ready to franchise your business, your franchise plan must include systems for training, operations, administration, and marketing. If your business requires equipment, you need to find ways to minimize those hard costs for owners.

You may need to offer assistance with lease agreements or attain the most desired locations. Your business needs to be turnkey for every franchise owner. You may be ready to franchise your business if you have a solid plan for franchise owner support.

For more information on when you should franchise your business, contact us for a free franchise consultation.

Franchise My Business with the Right Sales Process

Step 1: Franchise Outreach/Lead Generation

Franchise lead generation and marketing will fill your franchise sales funnel and be the first interaction with a potential franchise buyer.  Potential lead portals for franchise lead generation:

·         www.FranchiseConduit.com

·         www.Franchiseopportunities.com

·         www.Franchisegator.com

·         www.TheFranchiseCourier.com

·         www.FranchiseDirect.com

 

Organic leads can be generated through franchise referral programs, Franchise SEO, Franchise Public Relations and other mediums. 

Franchise Tradeshows can be an effective way to generate leads and meet potential franchise candidates in addition to other marketing channels.

Step 2:  Franchise Contact and First Presentation

Franchise leads should be greeted with an automated response promoting the model, the franchise value proposition and the overall concept so they are enticed to have additional discussions with the franchise team.  Franchise sales calls should be made within 60 minutes of the lead being submitted for best results.  We typically recommend that a text message should be sent as well. We then have additional introduction emails which should be crafted to your brand and franchise model, but ask key questions:

·         Why are you interested in the franchise?

·         What Time Frame would you like to open the Franchise?

·         Qualify the Franchise Candidate.

·         Present the next step in the sales process.

Step 3:  Franchise Presentation Call

During this call, you should explain the sales process and the defined steps in the process before they would execute a franchise agreement.

1.       Introduction and explain the team behind the franchise.

2.       Define the process and qualifications needed to be awarded a franchise.

3.       Ask the buyer to speak openly with you and share their story. 

4.       What is the timeframe for this decision?

5.       Confirm that the franchise process is clear and understood. 

Step 4:  Franchise Buyer Approval / Disclosure

Once the candidate has submitted their completed Franchise Request For Consideration form, it is reviewed and approval is granted to move forward in the process.  We review with candidate what to expect upon receiving the Franchise Disclosure Document.  We recommend sending a hard copy of the FDD sent via FedEx and electronically via DocuSign.  We then like to schedule a call to review the FDD with the candidate and go through the document in detail. Following the candidate being disclosed, validation and communication with existing franchisees is encouraged and recommended.

 

            Disclosure:  Current registered FDD document is sent to candidate.  Unaudited financial statements must be current within 90 days.  In registration states, the revised agreement must be renewed with every registration state every year.  The following are registration states: CA, FL, HI, IL, IN, MD, MI, MN, NY, ND, OR, RI, SD, TX, VI, WA, WI. (https://www.fmsfranchise.com/blog/franchise-state-registrations/)

Step 5:  Franchise Discovery Day

Once a candidate has been disclosed and had the opportunity to thoroughly review the Franchise Disclosure Document, an invitation to attend a Discovery Day is extended.  The Discovery Day is the ultimate franchise sales opportunity, it is where you show off the business, let them see the business in action and get to know everyone involved in the business model.  If the discussions take you there, you can ask for the close at the Discovery Day. 

Step 6:  Follow up for the Close

Constant follow up is given throughout the entire process, the closing process is no different.  Following Discovery Day, most often the candidate has additional questions regarding the information they were provided during their visit.  The final commitment to move forward and become a franchisee is requested and confirmed.

Step 7:  Award Franchise

Now that the decision has been made to become a franchisee, Franchise Agreements and all supporting documents are signed, notarized and submitted to the corporate office along with payment of the initial franchise fee. Training is scheduled and the countdown to Grand Opening begins for the approved franchisee.

 

For more information on How to Franchise Your Business, contact us: https://www.fmsfranchise.com/about-franchising/contact/