7 steps you must take to franchise your business
- 1. Make sure that your business is ‘franchiseable’ While ‘franchiseable’ may sound like a made-up word, this first step is vital if you want to be a successful franchisor. ...
- 2. Develop a business strategy ...
- 3. Refer to the BFA ...
- 4. Seek specialist advice ...
- 5. Decide on your fee structure ...
- 6. Recruit and train franchisees ...
- 7. Market the franchise ...
Full Answer
Should I buy a franchise or start my own business?
Buying a franchise is very different from starting a mom-and-pop business. Since there is an already established system in place, there is a higher likelihood of success. If you invest in a proven franchise opportunity and follow the system the franchisor has put in place, you should be on your way to running a successful business.
How to turn your business into a franchise?
- Set Realistic Goals. Franchising is more of a marathon than a sprint. ...
- Research Your Competitors. ...
- Develop Your Franchise Offering for Both Individual and Multi-Unit Sales. ...
- Make Sure Your FDD Is Compliant for Every State. ...
- Learn Franchising and Get Involved in the Franchise Community. ...
How much will it cost to franchise my Business?
There are currently 14 registration states with franchise registration fees ranging from $250 to $750 plus additional legal fees leaving you potentially $15,000 to $25,000 out of pocket. A Federally Registered Trademark will set you back $1,750 to $7,500.
How to start a small business franchise?
When purchasing a franchise, there are four main cost parameters to consider:
- Franchise fee - Virtually every franchise opportunity requires the business owner to pay a one-time, upfront franchise fee.
- Initial investment - Your initial investment covers the materials, labor, and resources you'll need to launch. ...
- Ongoing investment - This is the money you'll need to run the franchise on an ongoing basis.
How much does it cost to franchise a business UK?
The initial franchise fee is usually the most expensive fee you have to pay on your journey to becoming a franchise owner. This fee can usually range from anywhere between £300 all the way to £250,000 and up, depending on which franchise you decide to make an investment in.
How do I start a franchise business in the UK?
Luckily, we've got all the tips you need to make the right decision and take the first step towards starting your very own franchised business.Do your own research. ... Book your place at a Discovery Day. ... Location is key. ... Secure your funding. ... Read the franchise agreement … then read it again! ... Seek out professional help.More items...•
How can I turn my business into a franchise?
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.
How much does it cost to franchise a small business?
How much does it cost to start your own 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.
Are franchises worth it UK?
Franchisees take less financial and personal risks than a new business owner but enjoy a higher chance of turning over a healthy profit. A new franchisee partners with an experienced franchisor so they do not need to invest unnecessary time, energy or capital into getting their business up and running.
Do banks give loans for franchise?
Credit unions and commercial banks too offer franchise business financing. However, the process of documentation may test your patience. Your choice institution will study both your personal and business credit scores.
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.
Is franchising my business a good idea?
You should only franchise if it is a part of your long-term growth strategy and goals. Only franchise if your goal is to expand your brand and to build an organization to support and assist your future franchisees.
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.
Do franchises pay taxes?
Franchise taxes are paid in addition to federal and state income taxes. The amount of franchise tax can differ greatly depending on the tax rules within each state and is not calculated on the organization's profit. Kansas, Missouri, Pennsylvania, and West Virginia all discontinued their corporate franchise taxes.
What does a KFC franchise cost?
For non-traditional KFC outlets, KFC charges an initial license fee of $22,500. For traditional KFC franchise agreements, the franchise (or initial license) fee is $45,000 split into the deposit fee and the option fee.
Is a franchise fee a one time payment?
FYI: Monthly royalties are where the profits are for franchisors-not the upfront franchise fee, which is a one-time payment. As shown above, franchise fees are a necessary part of franchising.
How does a franchise work UK?
Franchising is when an established business allows a third party the right to operate using their trade-name, either through their manufacturing, distribution or sales channels. This is usually in return for a one time franchise fee, plus a percentage of sales revenue.
Can a sole trader be a franchise?
A franchise is not a legal structure but is a business model that can operate under one of the legal structures, ie as a sole trader, or type of partnership or limited company - see: set up as a sole trader.
Are franchise owners self employed?
While there are differences, the misconception that you're not self-employed if you're a franchisee, at least based on the definition of the term, is incorrect. Clearly, creating income is where the rubber meets the road.
Do you need experience to open a franchise?
This is how successful franchise owners learn how to become leaders, and how to think like a business owner. So essentially, no you don't need experience in business ownership to be successful however your intrinsic skill set will help you to adapt to franchise ownership quicker and with less issues.
How to sell a franchise to a potential franchisee?
To do this, set up a pilot operation (or preferably two). The pilot operation may be a new business owned by you, or it could be a franchisee who you offer preferential terms to because this exercise will be a learning curve for both of you. The pilot operation should run for at least a year so the new business can experience all trading conditions. During this time, you should be analysing their results, refining your systems and ironing out any potential difficulties. Some of the most successful franchise businesses are the ones where the franchisors give their franchisees the best support and training. During the pilot operation you should also work out what initial and ongoing training you will need to provide to ensure your franchisees can achieve consistent results. When you’re confident you have a system that someone else can successfully follow, you’re almost ready to start selling franchises.
What is the key to a successful franchise?
However, the key to a successful franchise is consistency . You need all of your franchisees to be able to run their businesses using the same systems as you and achieve the same results. To help them do this, you must document all of your processes and procedures and collate them into an operations manual.
What is a franchise agreement?
The franchise agreement is a legally binding contract which serves two important purposes. First, it gives the franchisee the right to use your brand and business systems in their own business; and second, it enables you, the franchisor, to control the franchisee to ensure they follow your systems exactly as you want them to.
How to prepare for franchising?
As well as preparing your business for franchising, you need to prepare yourself. As a franchisor, your day to day role is going to change. Rather than focusing on running and growing your own business, you will have to be there to support your franchisees. If you don’t want to do this personally, make sure you have someone in your business who is ...
Is Nando's a franchise?
Although Nando’s is not a franchise in the UK, the Nando’s versus Fernando’s dispute is a classic example of what could happen to you as a franchisor. I wrote about this in a previous article, but very briefly Fernando’s opened a chicken restaurant with very similar branding to Nando’s.
Is there a regulation for franchises in the UK?
In the UK, there is very little formal regulation over franchise businesses. Instead there is a system of self-regulation through the European Code of Ethics for Franchising. This gives guidance on best practice in the franchise industry.
How do I franchise my small business?
How do I franchise my small business? A small business owner may ask a Franchise Consultant, how do I franchise my small business? Franchising is often seen as a logical next step for business growth. The dream of growing a business empire, via a franchise network as a small business owner can be tempting. And …
What is the relationship between a franchisor and franchisee?
What is the difference between a franchisor and franchisee? The franchise has helped to shape the modern business landscape. Without franchises, there wouldn’t be McDonalds, Subway, Pizza Hut, KFC, Europcar or Burger King and high streets in our towns and cities would look very different. The franchise model has enabled these companies to expand quickly …
Is my business ready to franchise?
This is a huge question and in these archives we will elaborate more on what you need to consider before you ask yourself should I franchise my business but here are some of the key points to consider is my business ready to franchise;
What is a standard franchise agreement?
What is a Standard Franchise Agreement? A standard franchise agreement is a legal document drawn-up by a specialist franchise lawyer. A franchise agreement details the legal responsibilities and obligations of both the franchisee and franchisor. A standard franchise agreement falls under one of two types. Standard franchise agreement allows an individual or individuals to trade …
What is a Master Franchise and what are the benefits of a Master Franchise?
Master franchise Opportunites: What are they and why you should consider investing Although the basic concept of franchising is relatively simple, the model can become somewhat more complex when implemented in a real-life business setting. Different businesses use the franchise model in slightly different ways, with many adapting the basic principles of franchising to suit …
What is franchise operations manual?
Franchise operations manual – This document records all day to day operations and forms part of the franchise agreement
Is franchising right for my business?
Franchisee & Franchisor relationship – Working with franchisees rather than staff is a completely different dynamic, they are business partners, not employees and the relationship will usually be a min of 5 years.
How to franchise my business?
Once you have determined above you need to document all your business processes. Effectively what you are creating is a very detailed handbook on exactly what a franchisee will need to do to set-up and operate the business, this is called a franchise operating manual. In addition to this you will also need other documentation including;
Can franchise lawyers be used internally?
The above can be carried our internally using franchise lawyers but franchise consultants with experience will be a significant help as they will have the contacts and more importantly the experience of putting all of this together and successfully recruiting franchisees for your businesses for sale.
What is the role of a franchisee?
No longer are you responsible for delivering the product and/or services, your role as franchisor is to supervise, control and lead a disparate collection of business owners to meet your exacting standards, procedures and policies, to deliver the business objectives with the same enthusiasm, energy and values that have made you successful.
Why use a franchise consultant?
Professional and suitably qualified franchise consultants will take the business owner through a series of procedures that ensure the business meets the criteria for ethical franchising. Any honest business person would agree, that it is unethical to ask potential franchisees to invest in a franchise concept that cannot demonstrate profitability, right?
How many criteria do you need to have to sell a franchise?
So, before you have the right to sell franchises, you need to be able to satisfy at least four basic criteria before franchising your business. The criteria are:
Is franchising a viable option?
If you are serious about growing your business and building your brand, you should at least consider franchising as a viable and proven option. Usually franchise consultants will offer an initial consultation for free and many like us, can even help you access grant funding and preferential borrowing terms.
What are the rules for a business?
Rules for your type of business. You may have other responsibilities depending on what your business does. Check if you need: licences or permits, for example to play music, sell food or to trade in the street. insurance. There are also rules you must follow if you:
What is the simplest way for 2 or more people to run a business together?
A partnership is the simplest way for 2 or more people to run a business together.
Is a limited company separate from a personal company?
If you form a limited company, its finances are separate from your personal finances, but there are more reporting and management responsibilities.
Do you have to pay business rates when you rent a house?
If you rent or buy a property, you may have to pay business rates. Small businesses can apply for a discount on business rates and some may pay nothing. Check if you can claim office, property and equipment as expenses.
