If you have a small business that can be easily replicated, then franchising may be one of the best ways to expand it at a fast pace. And if you tackle it the right way, you can certainly pump up your profitability.
Here are eight tips to help you through the transition:
Get organized. Think through the process of precisely how your business works. Franchisees will need exact details and guidelines to get their businesses up and running. This process takes some time, but it’s worth it — even if you decide not to launch the franchise option, this will still ultimately help your business run more smoothly. From marketing to signage to business cards to staff training, it all has to be executed in a similar manner. Develop an operations manual to give franchisees a quick way to reference policies and best practices and create an approval process so that you sign off on major decisions.
Hire an attorney. Getting expert advice is really crucial during the franchising process. For starters, you’ll need to fill out a Franchise Disclosure Document. It has a very distinct format you need to follow, and it’s important to have a lawyer walk you through this process. You’ll need to set pricing, create a franchise agreement and determine intellectual property protection. (In addition to meeting with an attorney, the International Franchise Association also has some excellent resources.)
Be picky. Just like dating, you should be extremely selective when it comes to choosing franchisees. It’s easy to find people with capital, but are they the right people? Do they have the right background in order to run a business? This is someone who will be representing you, so it needs to be a good fit. After all, you are in this to protect and grow your brand. Set up an interviewing process and know what your deal-breakers are.
Build and protect your brand. As a franchisor, your most valuable asset is your brand; protect it at all costs. Your brand represents your culture, your beliefs and your attitude toward your customers. When you franchise, you are giving new people the ability to represent your brand. This is one of the biggest risks of franchising. Clear guidelines should be established for the use of all of the brand assets. You want to be sure that you are sending one clear message from one clear source, and that message is consistent throughout the organization. No detail is too small. This can seem overbearing, but never let anyone use your brand assets in any way, no matter how small, without your prior approval. Monitor everything, pay close attention to videos and pictures, and monitor all social media outlets in a regular and detailed fashion.
Choose the right locations. What locations make the most sense for your business? Where do you have brand recognition already? Consider keeping your first few locations close to home, but far enough away that it doesn’t hurt sales at your initial location. That way, you can manage logistics easily. Keep in mind you’ll want to visit these locations in person from time to time, so choose locations with easy access to an airport.
Find a mentor … Or two or three. There will always be people who are willing to give you advice — you just need to seek them out.
Know how you want to grow. Steady, strategic growth is ideal. Does it make sense to expand on an international level? Or should you stick to a statewide plan?
Support your franchisees. At first, you’ll need some face time with your franchisees, as well as lots of time online and via phone. Do all you can to encourage them by celebrating victories and milestones. Scour through articles that you find helpful and share them. And last but not least, set up a way for franchisees to communicate with one another, too.
Tom Cannon is the CEO and cofounder of BungoBox, an Orlando-based company that rents moving containers made of recycled plastic as an alternative to cardboard boxes. Founded in 2009, BungoBox now has 17 locations in the U.S. and Canada and plans to open 150 more franchise locations in the next five years as part of a steady and strategic growth strategy.
Courtesy of YEC
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.