To franchise your business, you need to convince potential franchisees that they will make money. Franchisees will want to see evidence that the business model is sound, that you deliver what you have committed to in the franchise agreement and that they can make a good living running a franchise. You do this by having a successful business, and an operations manual that shows how franchisees can replicate it.
Demonstrate demand for your product or service
Market testing is an important part of this. If you cannot prove that there is a demand for the product or service your franchisees will be offering, they will be doomed to failure.
If you can demonstrate a clear demand for your product and service, you then need to prove that the franchise model works through the establishment of a pilot franchise operation. The pilot franchise operation will establish that all the back-up systems including training, operating manuals, financial support and marketing campaigns are effective. It will also give franchisees an indication of likely set-up costs, break-even points and how long it will take to become profitable.
Franchise operations manual
The franchise operations or operating manual gives detailed information on how to set up and manage a new outlet. It highlights key information such as:
- company information, key personnel and history
- identifying the franchisee’s responsibilities
- how a franchisee sets up a franchise including staff recruitment and office equipment
- main operating requirements
- main management requirements
- how franchisees ensure quality and consistency within their franchise
- customer service standards
- performance reporting and benchmarks
- training and support
- pricing, sales and marketing
Protecting your brand
Your brand is likely to be an important part of what you offer franchisees. Even if they know how to run a successful outlet, they stay with you because your brand helps them attract customers. Protecting your brand is essential. Read more on branding: the basics.
It is important that you put in place relevant protections to prevent your intellectual property (IP) being infringed (for example by registering your trade marks and company name or obtaining patents for your products). Once you have adequate protections in place you can then benefit from licensing your intellectual property. It is also easier to protect your IP if it is registered and you can prove ownership.