how do you make your business a franchise

How to create a franchise for your business (6 simple steps)

• 1. Evaluate your business The first thing to create a franchise is to ask yourself if your business is ready or not to be franchised. ...
• 2. Learn about legal requirements ...
• 3. Decide the conditions of your business ...
• 4. Filter potential franchisees ...
• 5. Establishes the operation system and its restrictions ...
• 6. Monitor your franchises and keep growing ...

Full Answer

How can I start my own franchise business?

When preparing for your big day, a few tips can help make it a success:

• Choose a date with high traffic. Your opening date and time should be ideal for attracting as many people as possible.
• Advertise to your local market. ...
• Send press releases to local media outlets. ...
• Invite friends, family and city officials. ...
• Decorate the store with grand opening paraphernalia. ...
• Organize exciting activities on opening day. ...

How to successfully franchise your business?

• Present Your Business to Potential Franchisees. After identifying your goals, you may now sell your franchise business model to your prospective franchisees.
• Provide Hands-On Training. If you have a vision for your franchise business, your franchisees must share the same objectives with you.
• Work On the Ground. ...
• Implement The Organizational Culture. ...

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 run a successful franchise business?

• Choose the right franchise. Franchisees whose skills and interests are a good fit for the business are usually more successful than those purely tempted by the financial opportunity.
• Follow the franchise system. ...
• Have a business plan. ...
• Take advantage of franchisor support. ...
• Be friendly with your franchisor. ...
• Have sufficient funding. ...

How much does it cost to turn a business into 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 are the 4 ways to become a franchisee?

4 ways to become a franchiseeFigure out your passion and skill set. Buying a franchise business shouldn't just be about facts and figures. ... Prepare to buy-in. ... Investigate franchise brands. ... Speak to experts and existing franchisees.

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.

When should you franchise a 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.

What are the different franchise options that are currently available?

Personal Services. Factors driving this category are the interest in health and fitness, as well as the growing lifespan of the population. ... Business Services. ... Quick-service Restaurants. ... Retail Products & Services. ... Commercial & Residential Services.

How long does it take to become a franchisee?

The franchise purchasing process — from the search to the purchase — will take three to four months. Typically, it will take another two to six months before you open your doors to customers.

How does opening a franchise work?

A franchise enables you, the investor or franchisee, to operate a business. You pay a franchise fee and you get a format or system developed by the company (franchisor), the right to use the franchisor's name for a specific number of years and assistance.

What are the qualities to look for in a prospective franchisee?

Here are attributes all franchise companies are seeking:A Good Attitude. Do you have a positive and focused attitude? ... Smooth Operator. ... General Skills and Experience. ... Risk Aversion. ... Coachability. ... Affinity for Effort. ... Strong People Skills. ... Adequate Capital.More items...•

Do franchise owners make money?

Although franchisors cannot forecast income, as a franchisee, you can definitely make money. It’s important to assess your costs regularly and make...

Are franchise fees paid yearly?

Franchise fees are usually on a monthly basis. The fee is a percentage of your revenue, and the royalties can range from 4% to 12% per year.

How much does the average franchise owner earn per year?

In a study from Franchise Direct, the average franchise owner makes $80,000 a year before tax. However, the range of income is quite large: anywher...

What kinds of franchises are available?

In general, there are three types of franchises available: business, management and product distribution. A business franchise gives you the rights...

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 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.

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.

How to expand a franchise?

Your best expansion strategy is to begin in your local market first and then to the adjacent city and outwards from there to adjacent states and on and on. You don’t want your new locations to encroach on your existing market, and you definitely don’t want your franchisees encroaching on one another. Look at a map and set up buffer zones between prospective markets. Then consider which neighborhoods you do and don’t want your franchise to be located in. This will ultimately determine how consumers perceive your brand. Setting minimum standards for the quality of shopping centers or strip mall locations is an important barrier to entry.

What is franchise development?

Working with your franchise consultant, you will develop a plan on how to position your offering so that it is easily expandable. Your consultant will review your business operation and recommend ways for effectively delivering various services (i.e. their weekly inventory) for franchisee’s operations.

What is the most important decision in franchising?

Selecting a franchise consultant is the most important decision in franchising your business. Franchising is only learned through experience and when selecting a franchise consultant you must make sure to select one that has operated his/her own franchise system. Operating a franchise system successfully is the best way to learn about franchising.

Is it exciting to franchise a business?

The launch of the first franchise will provide you with a wealth of knowledge and is very exciting to see your business grow into another location without investing any of your money or time. This is why after it is open and operating smoothly you may be tempted to pick up another right away. Don’t take on too much at once as you will still need to provide adequate support to your first franchise as well as your home location.

Is it ill advised to start a franchise?

Many would-be franchise starters are so excited about the opportunity to spread their brand that they rush ahead with anyone who shows interest. This is an ill-advised move. Rather , you need to set clear standards for your prospective franchisees up front, including liquid assets, experience, completion of training programs, etc. It will look far worse for your brand if you have franchises popping up and fizzling out repeatedly than if you take your time and expand slowly.

How much does it cost to start a franchise?

Franchise costs vary widely depending on the industry and business you choose to invest in, not to mention where you live or plan to do business.

How long do you have to get a copy of your FDD before signing a contract?

The franchisor is required to provide you with the FDD at least 14 days before you sign a contract, though it’s a good idea to request a copy earlier in your initial phases of research. You can typically download a PDF of the FDD, though some franchisors might be willing to send you a hard copy. 5.

What are some online lenders?

Other options include crowdfunding or lenders based entirely online. Online lenders like Kiva and BlueVine aren’t part of the traditional financial industry populated by banks and credit unions. These digital lenders tend to leverage technology for more streamlined or automated approval processes. You could also use an online business marketplace like Lendio or Fundera to compare a network of funding options in one spot.

How to get a copy of a franchise disclosure document?

Reach out to the franchisor for a copy of its franchise disclosure document (FDD), which contains detailed legal information about its franchise group along with financial data like the average gross revenue of its locations.

What to do if you don't have a franchise?

If you don’t have the initial investment costs at the ready, you may need to tap into outside financing to launch or run your franchise. Many banks, the SBA and franchise-specific lenders offer financial help for would-be franchisees. Other options include crowdfunding or lenders based entirely online.

Why do you need a business plan?

A business plan is necessary if you plan to apply for a loan to help with startup costs. Lenders want to know that you have a viable plan for turning a profit and sustaining your business over the long haul, because it helps them evaluate whether you’ll be able to pay it back.

How long does a franchise contract last?

Franchise contracts come with terms of five to 20 years. At the end of the term, you can often choose whether to renew the contract or discontinue your franchise. At contract signing, you’ll likely need to also pay any upfront fees or initial investment expenses.

What to use to attract franchisees?

If you are in the process of attracting possible franchisees, you can use advertising. The best would be business magazines or sites like LinkedIn where you will reach the professional audience.

Why do we have franchises?

The franchises serve us to expand our business and obtain recurring income from businesses that no longer depend on us.

What are the requirements for franchising?

Some of these decisions will have to do with: 1 The place of the franchises 2 The requirements to be a franchise 3 The training and guidance you will offer as a franchisor 4 The way you will promote franchises 5 The initial cost of franchising and commissions 6 The distribution or manufacturing of the products or services 7 The period of time by which the agreement will be signed 8 This part is of vital importance since those decisions will have a strong impact in the coming years.

What is the part of becoming a franchisor?

Part of becoming a franchisor includes having to add key personnel to support the franchises.

What are some examples of fast food franchises?

To better understand this concept, we can think of some examples like McDonald’s and KFC. These fast food businesses are all over the world and have managed to expand thanks to their franchises.

Why is it important to have other business units before franchising?

This is why it is important to have other business units before franchising, to have a business replication method already established. In addition to offering instructions on certain business practices, some freedom should be granted to the franchise, as well as certain restrictions.

Why do you grant the right to use a brand?

to someone else, so it’s easier for them to attract customers than to start their own business under a new name. Another benefit is that they operate under a business model that already works, they do not need to create one.

What is franchise support?

A support network among other franchisees stepping up to help each other. It is not just one person out there running your business, but a group of business owners, all part of the system. The result is a culture of like-minded people is created.

What is a franchise operations manual?

A Franchise Operations Manual that houses all your best practices, procedures, “know-how” and various pieces you will end up giving to your franchisees that will help them when operating their business (read about the franchise operations manual); and

Is a franchise fee a source of revenue?

The franchise fee is part of how you will make money franchising (see more on how the franchise fee is determined). Needless to say, the franchise fee is not your main source of revenue.