So you have made the decision to franchise your business. As we previously discussed, a solid legal foundation is crucial to establishing a successful franchise system. Equally important are other building blocks that come into play at the start of the process and should be in place for a successful launch: Operations, Technology, and Franchise Sales and Development. Once these are in place, to grow the system you will also need enthusiastic people and other resources to support franchisees, marketing efforts, and help grow the brand.
Operations
One of the things your franchisees are purchasing from you is your know-how and the nuts and bolts of how to launch and operate the franchised business.
At the heart of this transfer of knowledge is the Operations Manual. An Ops Manual is a confidential document you will provide to franchisees that establishes the franchise system’s rules, standards and specifications for what has to be done to accomplish a task or to use/sell a certain product or service.
It contains the franchise system’s proprietary information and educates franchisees. It can be changed or updated at any time so you will need to ensure it is always current and up-to-date.
Also key to operations is ensuring that you have proven the model by demonstrating single unit profitability — and that the model can be replicated in other markets. If you have not met this threshold, it is best to hold off on launching while you continue to fine-tune the business until you are confident in the unit profitability of the model.
Technology
In today’s connected and digital world, technology has become an important piece of building a successful franchise business.
Franchisors that have invested in proprietary technology – whether it’s related to their relationship with franchisees or the brand’s relationship with customers – have a leg up over the competition and provide extra value to franchisees.
Franchise Sales and Development
OK, so you have built out your systems, your team, and have met all the legal requirements. Congratulations, you are officially now a franchisor. Now you need to sell your concept to franchisees!
There are many avenues to selling franchises and some are better fits than others, depending on your concept, customer base, and ideal franchisee. Bringing on board an experienced franchise salesperson, team, or consultant may be your best approach, or if you think no one can sell your system like you can, you may be the brand’s best salesperson.
One of the keys to this process is ensuring compliance with the many rules that apply to franchise sales. There are technical rules about the timing and method of providing the FDD to prospects as well as rules about where and to whom you can offer a franchise. Having a vetted system in place will help avoid legal headaches down the road.
