Make Sure Your Business Is Right For Franchising
Not every type of business is suitable for franchising, but it usually works well where a wide variety of products or services are involved, for example, where there is a strong demand being created for new or innovative goods targeted toward niche or specialist markets. If your business offers products or services with a broad appeal, or which satisfies a common need, franchising may be a good way for you to grow. This would apply, for example, if you have an existing, and profitable outlet supplying branded items that have a high profile and strong reputation with customers. Many household names have managed their growth via franchising.
Franchising is not so good a choice if your business supplies products or services with a short market life- if it is catering to the latest fad, for example, or with low profit margins. Similarly, if you offer services that involve high skill level and prolong training, such as accounting, or which rely on repeat business from customers with a strong sense of loyalty, franchising is unlikely to be the right option. This might also be the case if the business is dependent on a geographically defined market, as would be the case with a tourist attraction. Enterprises with high levels of audit and control requirement- a financial institution like bank, for example- are unsuitable too, as these outlets can't operate as separate legal entities, which is essential with franchises.
Prepare Your Business For Franchising
As part of the careful research and planning you need to do to prepare your business for franchising, you should identify the elements of your operations that can be adapted in each franchised outlet. You can't franchise a concept or an idea, so you should have business format that has been tried, tested, and shown to have a good track record in a particular marketplace. Your brand name has to be strong enough to attract suitable franchisees. Where appropriate, you should have proven manufacturing processes or distribution systems.
Among the things you'll need to develop are a new accounting system and a business.educationeasy.net business plan for your franchising activities. You'll find it a great help to do "SWOT"- strengths, weaknesses, opportunities, and threats analysis for each geographical area in which you'd like to establish an outlet. You'll need to devise and establish support services for your franchisees, as well as initial and ongoing training programs that will enable even relative novices to learn about the various facets of your business and how to then run their own franchises successfully. There will be technical issues in all these aspects of franchising your business, so you should be prepared to call in professional advice at each stage. It is advisable to run a pilot operation for at least 12 months preferably at more than one location, to test the business concept in different geographical areas. When this has been successfully conducted and fine tuning has been done, you can then prepare a prospectus to attract suitable franchisees.
Recruit Franchisees
It will be important for you to be able to attract franchisees of the right caliber to be certain your network is successful, so do be wary of badly run franchise recruiting agencies. Put in place a thorough vetting process for candidates that will allow you to attract highly motivated applicants, You could consider;
* attending franchise exhibitions,
* advertising in newspapers and trade magazines
* setting up or adopting your business.educationeasy.net business website to promote the franchising opportunities.
* registering with reputable franchise centers and brokers.
Drawing Up Franchise Agreements
A franchise agreement is a contract between you and the franchisee. You'll be able to negotiate various aspects of the agreement and there are no hard and fast rules about what it should contain. However, it must comply with Federal Trade Commission and individual state regulations. It must also be clear and unambiguous in starting the rights, duties, and responsibilities of you and the franchisee, and reflect the interests of all members of your network.
When evaluating the agreement you should consider the following issues;
* the rights granted to you and the franchisee,
* your obligations and those of the franchisee,
* the goods and services provided by you to the franchisee,
* the terms, and amounts, of the payments of the licenses, management fees, and other costs you impose,
* the duration of your agreement,
* the basis for any renewal of your agreement,
* the terms by which the franchisee may sell or otherwise transfer their interest in a franchise,
* the terms by which the franchisee may use your trade names, brand names, logos, store signs, and so on,
* your rights to adapt the franchise system to meet new or changed methods and market conditions,
* the franchisee's right to terminate the agreement before it expires,
* the ownership of property, tangible and intangible, provided by you to the franchisee and provisions for its surrender if the agreement is terminated.
Think about whether or not you'll be granting exclusive geographical licenses to the franchisees, and how big the respective areas will be. Also think about whether you'll allow them to pursue other business interests, possibly competing ones, at the same time.
Alfred C. Amaechi is an expert in homebizglobe.com/articles Legitimate Home Businesses. He's been in the business for many years and has authored many books on guide to starting out in Legitimate Home Businesses. His considerable expertise has thrust him into the limelight as he trains prospective business owners to becoming successful in Home-Based Businesses. Do you want to learn more about Legitimate Home Businesses? Visit homebizglobe.com homebizglobe.com for a comprehensive GUIDE and FREE e-books.
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