Can you franchise your business? If you have a thriving business that is receptive to a regional or national marketing system, then franchising may be the right choice. To help you determine if your business could be franchised, please evaluate some of the requirements outlined below.
First, evaluate yourself as a potential franchisor. The franchise is more than the business of selling services or products. He will also be a mentor, coach, and perpetually supporting his franchisees. You will also be charged an initial fee for the franchisee to start operating and then receive royalties for the life of the franchise.
Remember to always allow your individual franchisees the flexibility to run their own businesses and to always allow them to act as independent business owners, not employees. It is important that you thoroughly establish the guidelines of the franchisee relationship in the original contract, the franchise disclosure document, and all communications to the franchisees.
Don’t consider franchising your business unless you have an identified local market for your product or service. Marketability is established by necessity and necessity is determined by the competition. If you have a unique way of operating a business and you have a unique business model, you may be able to franchise it.
Demand is the essential force here. It is as central as the singularity. Your unique product or service should be desired not only by business people who want to buy franchises from you, but also by people who will buy products or services from those franchisees. If your product or service is relatively new and is not widely offered by anyone else, but it is in demand, you must first determine where your products or services would be sold, based on requests from your current customers.
If your product or service is not new, you can hire market research companies to create reports on the types of consumers in various regions. You can also conduct your own study on the Internet. Government agencies can also provide demographic information and market research data. The US Department of Commerce’s Bureau of Economic Analysis and the US Department of Labor’s Bureau of Labor Statistics have conducted extensive studies on regional consumer behaviors. Look for “consumer habits” on these government websites. If your product or service is unique or in demand, ensure this uniqueness by using a trademark, for a product or service mark, for services, so that the public connects your product with a particular trademark. Apply for a trademark as soon as possible, before the first franchise agreement is offered and reached. Determine that no other entity has already obtained the rights to your trademark. You can do this for less than $ 600 by contacting one of the many trademark search companies or by visiting online at http://www.uspto.gov.
Before starting your franchise plan, prepare a comprehensive business plan so that you can see the financial expenses that each new franchisee will require to start operating; Then compare that to the income you can expect to receive from fees, royalties, and sales. Include costs that are specific to the franchise, such as operating costs, such as salaries and benefits for you and your home office employees, trainers, and sales staff; as well as rent, office equipment, car allowances, and travel. Include the cost of finding franchisees: advertisements, trips to franchise shows, preparation of brochures and videos, and entertainment. Add an appropriate amount for ongoing startup, legal, accounting, and advertising fees.
Be very conservative about the timing and income you need from your franchisees. You will have determined the combination of franchise fees, royalties, and product or service sales that will generate income from your franchisees. Calculate when you expect this income to be paid, rather than basing your predictions on how your business has performed in the past.