Your local business is experiencing great success and you think it’s time to expand into franchising. Where do you begin? Franchising can be a complicated process, but the experts at the U.S. Small Business Administration look to share their advice on the subject.
Joel Libava, a franchise ownership adviser best known as The Franchise King for his longest-running blog in franchising, recently offered tips on the process:
- Validating the idea - Before someone can turn their business into a franchise business, they need to make sure they have something. Libava gives the example of Colonel Harland David Sanders, who realized he had something special with his “secret recipe” for fried chicken and began franchising his Kentucky Fried Chicken restaurants.
- Duplication – One of the most difficult things about franchising is duplicating the success of the original location without sacrificing quality. Libava recommends avoiding franchising until you have a second location up-and-running that is profitable.
- Creating a System – All of today’s successful franchises share a solid business system that can be easily followed. You need to make sure you document everything you did to open your second location, including square footage, details of the items your contractors used to build-out the location, technology needed to operate the business, signage used, types of employees needed, marketing, and more.
- Legalities – You must make your franchise legal by registering it as a franchise business. Doing so, along with having the proper documents, will enable you to sell franchises to others. Libava says that you’ll need to hire an experienced franchise attorney to structure your business and draft the proper documents.
- Marketing and Sales – Once everything is legal, you’ll need to market your franchise. You’ll need to create a marketing campaign (Libava recommends hiring an experienced franchise marketing firm to jump-start the process) and create a step-by-step sales process that all interested franchise candidates will go through.