how and why to franchise your business

Franchising your business allows your brand to grow and duplicate at several levels:

1. At the national or global level, all franchisees and corporate units contribute to a marketing fund that is used to promote the brand and build awareness for the company.
2. At the regional level, franchisees work together through regional cooperatives where advertising dollars are spent in a region to build local awareness and leverage economies of scale in advertising and promotion spend.

Full Answer

Why you should start a franchise?

Top 10 Reasons To Buy a Franchise

1. Track Record of Success. Any good franchise company has developed a method of doing business that works well and produces successful results. ...
2. Strong Brand. One of the biggest advantages of franchising is that the company is building a brand on a regional or national basis that should have value in the ...
3. Training Programs. ...
4. Ongoing Operational Support. ...

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What are the benefits of owning a franchise business?

The Pros Of Buying A Franchise

• Skipping Startup Stage. The most difficult part of owning a business arguably comes in the startup stage, where you have to write a business plan, conduct market research, create a ...
• Instant Name Recognition. ...
• Training Program. ...
• Help With Marketing And Advertising. ...
• Access To Increased Purchasing Power. ...
• Easier Access To Financing. ...

What are the advantages and disadvantages of owning a franchise?

These include:

• Limited Control: As a franchise business owner, you have limited control. ...
• Costs: Opening a franchise is not a cheap endeavor. ...
• Potential Leadership Changes: There is always the possibility that the franchise can be acquired and new leadership will move in.
• Lack of Privacy: Being a franchisee also comes with a lack of financial privacy. ...

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Why is franchising the best business?

Why Franchising Can Be The Best Business Decision For You

• Low Failure Rate. You buy an existing system that has already been proven to be popular when you purchase a franchise.
• Effective Management. Finding and keeping successful unit managers is another stumbling block facing many entrepreneurs who want to grow.
• High-Speed Growth. ...
• Conclusion. ...

Why should you franchise your business?

Franchising can be a good solution because it allows companies to expand without the risk of debt or the cost of equity. Since franchisees provide the initial investment at the unit level, franchising allows for expansion with minimal capital investment on the part of the franchisor.

How do you franchise your business?

How to Franchise a BusinessMake sure your business is ready to franchise.Protect your business's intellectual property.Prepare a financial disclosure document (FDD)Draft a franchise agreement.Compile an operational manual for franchisees.File or register your FDD.Set a strategy to achieve your sales goals.

What are 3 advantages of a franchise?

Advantages of buying a franchise You don't necessarily need business experience to run a franchise. Franchisors usually provide the training you need to operate their business model. Franchises have a higher rate of success than start-up businesses. You may find it easier to secure finance for a franchise.

When should I franchise my business?

As a general rule, it's recommended that businesses have at least one to three years of successful operations before franchising. That number could be higher or lower, however, depending on the industry. For some businesses, franchising during the first two years of operations can be advantageous.

How do franchise owners get paid?

How do franchise owners get paid? Franchise owners can pay themselves a salary or depending on their business entity, they may be able to take a draw from their accumulated equity.

Can I start my own franchise?

You need sufficient starting capital to purchase or lease space for your business, acquire equipment and starting inventory, obtain necessary business licenses and insurance, and hire and train staff. Start your business with a built in support structure. Franchisors would like to see their franchisees to succeed.

What does it cost to start a franchise?

Franchise startup costs can be as low as $10,000 or as high as $5 million, with the majority falling somewhere between $100,000 and $300,000. The price all depends on the industry, location and type of franchise.

What does it mean to franchise a business?

A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand's trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.

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When evaluating whether franchising makes sense for you as a business owner, it’s important to do some?

When evaluating whether franchising makes sense for you as a business owner, it’s important to do some self-reflection to help determine if your business is in a place where you can mentally and physically commit to stepping out of the daily operations and into more of a management role.

Why do you need to have strong systems and processes before franchising?

Your business also needs to have strong systems and processes in place before franchising because the transition to franchising means adopting a replicable model. As an example, you may think you’re in the pizza business, but once you decide to franchise your concept, you’re no longer making pizza in the shop—instead you’re running a franchise that happens to sell pizza. You’re now required to teach other people how to make the pizza, approve real estate sites, help your franchisees with construction and establish back-of-house operations, meaning the days of exclusive kitchen work, for you, are over.

How many pages are needed for a franchise operation manual?

While most people who have entered into the process have a strong grasp of their business and have overall systems documented, almost no one has a detailed , 200-page, step-by-step manual required to support your franchisees.

How many hours do you work in franchising?

As you continue through the process of franchising your business, it is imperative that you remain focused. This doesn’t necessarily mean working 10 hours per day, but it does mean being organized and ready to answer any and all questions.

Is it a good time to franchise when sales are down?

Simply put, it’s the wrong time to franchise when sales are down. Franchising isn’t a means of turning your business around—the ideal time to grow through franchising is when things are heading in a positive direction. Your business also needs to have strong systems and processes in place before franchising because the transition ...

Is franchising a realistic idea?

That being said, franchising isn’t a realistic means of expansion for every business. Entrepreneurs interested in dipping their toe in the franchise waters should consider several key factors before diving in.

Is franchising a sprint?

It is also critical for business owners to understand that growing through franchising is a marathon, not a sprint. If you’re looking for something fast and easy, this isn’t the proper method by which to scale your business. There’s no instant gratification. As a business owner, you must be prepared to invest substantial capital and time on the front end to establish a system with long-term viability through franchising.

What does it mean to franchise a business?

When you franchise your business it means that you have taken the necessary legal and business steps to sell franchises, support franchisees, and grow your brand. First and foremost, your franchise lawyer will have to prepare and issue a Franchise Disclosure Document that complies with federal and state law.

How Long Should It Take to Franchise My Business?

Typically, franchising your business takes from 90 to 120 days. Depending on unique factors related to your business or industry, there could be variations. A lot also depends on who you are working with and your internal team.

What Are the Franchise Laws and What Is a Franchise Disclosure Document?

Franchising is regulated and requires compliance with federal and state franchise laws.

Can a Franchise Developer or Consultant Prepare My FDD Instead of a Franchise Lawyer?

No. Your FDD is a legal document that requires the integration of federal and state-specific franchise laws and regulations and should only be prepared by a qualified franchise lawyer.

How Do I Get Started?

By reading this guide, you’ve already taken the first step! Now that you have a solid foundation as to what franchising is all about and the steps involved, start building the right team to help support and guide you in franchising your business .

How long do you have to give FDD to franchisees?

It’s required by federal and state law and is the legal foundation for your franchise. You are required to give prospective franchisees your FDD no less than 14 days before signing any agreement with a franchisee or accepting any payments from a franchisee.

What is the first stage of franchise development?

Stage 1 – The Franchise Development Stage is the franchise development stage where you take the legal and business steps necessary to call yourself a franchisor and start selling franchises. During the franchise development stage, major milestones include developing and issuing your FDD, preparing your operations manual, and competitively benchmarking your franchise offering relative to your competitors.