How and when you franchise your business depends on if it is part of your long-term growth strategy and goals.
If your goal is to expand your brand and build an organisation, then by all means, start to put plans in place for franchising. Franchising allows you to expand your business at a rapid rate, without the risk of debt or the cost of equity. As the franchisor, you have few costs because the franchisee pays for all the equipment and set-up costs as part of their franchise fee.
Is your business franchiseable?
The first step is to find out if your business is worth franchising. You can seek advice from a British Franchise Associated approved Franchise Consultant. They will carry out a thorough franchise feasibility study to determine whether it’s wise to consider franchising your business model, and present their findings.
You need to consider what has made your existing business successful, and how that success can be achieved in different geographical areas. Assess whether your business relies on skills that are entirely unique to you. If this is the case, think about how someone else would be able to replicate what you have done without your particular skillset.
If your business provides a product or service that is particular to the location you operate in, then you need to establish if there is a genuine market for it elsewhere. Some very successful franchise brands have failed in new markets because the product or service just didn’t fit.
A franchiseable business would need to be:
- Profitable
- Credible
- Unique
- Transferrable
- Teachable
- Supporting
- Affordable
Franchise Agreements
The most important document when taking out a franchise will be the Franchise Agreement. Quality control established by the franchise system, careful training of the franchisees and ensuring adherence to the system by good quality ongoing relationship with the franchisees is supported by an effective franchise agreement, which must be drawn up by an experienced franchise lawyer.
Sadly, these are often presented as being “non-negotiable” and whether they are will depend on the strength and size of the franchisor and whether they have a queue of other franchisees wanting to sign up.
However, it is still vitally important that you have a professional franchise agreement review carried out by a franchising lawyer, so that you know exactly what your rights and obligations are.
How to franchise your business
To assess whether franchising is suitable for your business at this stage, consider:
- The business environment in which your business operates: will your experience allow you to develop a successful franchise operation?
- The products or services: are they suitable for a franchise model?
- Branding, sales and marketing: do you have a strong brand presence?
- Finance: are you in a strong enough financial position to support a franchise network, and is there enough potential profit to satisfy all parties involved?
- Administration: is your business system proven, robust and able to be learned by a franchisee?
Why do you need a Franchise Solicitor?
A franchise is a very particular type of business model, and as such, needs to be handled by an experienced franchise solicitor. Consider that by entering into a franchise agreement, you are putting your entire future network and brand at risk. It makes good business sense to draw up a watertight franchise agreement that supports all parties.
You may need advice on registering your trade and service marks. By using a specialist franchise lawyer, you will increase your brand value and give you and your franchisees greater protection.
An experienced franchise lawyer will advise you on the terms of your franchise and provide sound commercial advice.
