Faster growth, lower risk and building your brand are all reasons why franchising might seem like an attractive option for your business. The industry’s annual turnover for 2015 was over £15 billion, and it now employs over 600,000 people, according to a recent survey by the British Franchise Association. However, though the rewards may be great (look at Starbucks, Costa or McDonalds in the extreme!) as with any growth project there are pitfalls along the way and there are advantages and disadvantages of franchising.
Here’s our guide to how to franchise your business…
Consider whether your business is ready
Do you have a track record of sales and profitability? Have you a strong brand and staff ethos that can be replicated successfully and do you appeal to a wider market? All are questions to consider. At this point it’s a good idea to carry out some research into whether your franchise concept is saleable and if it will appeal in different locations.
Consider whether you are ready
As a franchisor you will no longer be left to your own devices to steer your own ship. Your daily activity will change as you’ll need to sell your franchise and mentor and advise those who are looking for franchise opportunities and may want to take on your model. Bear in mind too that you will have to give up some control of your business – a challenge for many entrepreneurs!
Get the right paperwork in place
You’ll need a franchise agreement to protect yourself legally so this must be water tight and cover:
- The rights granted to the franchisee
- The fees involved
- The terms and duration of the agreement
- Obligations of the franchisee and the franchisor
- Employees and training
- Intellectual property rights
You’ll also need to create an operations manual that reinforces the terms of agreement and sets out how the relationship and operation will work.
Protect your brand
It’s one thing giving up some control to take on franchisees and another opening up your carefully constructed brand to interpretation! There are many benefits of franchising but there are pitfalls to watch out for. Be sure to protect your intellectual property with carefully constructed wording in your franchise agreement and make guidelines on the branding of the business crystal clear.
Prepare for the unknown
As with any new venture, building a franchise is likely to be a steep learning curve. Surround yourself with a great team and consider using a business mentor who can pass on information and advice. You never know – your brand could be the next big thing!