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The Top Five Things to Know When Franchising Your Business
From using a consultant to attracting top quality franchisees, emerging franchisors should keep these factors in mind when breaking into the industry.

When it comes to expanding your business, there are a variety of different steps that you can take. One option is growing as one corporate brand—entrepreneurs can scale their concept themselves and open up other locations as funds become available. But for business owners who don’t want to use their own capital, time and resources to expand, franchising is a viable solution.

There’s no shortage of benefits that come with the franchising business model. By creating a system that can be replicated in a variety of different markets, brands have the ability to scale at a more rapid pace. Franchisors can also rely on their franchisees to do the heavy lifting in each individual location instead of having the responsibility of success fall entirely on them. But that’s not to say that breaking into the franchising industry doesn’t come without hard work.

If you’ve determined that franchising is the right option for both you and your brand, there are a few factors that you should consider throughout the entire process. According to SMB Franchise Advisors, a leading industry resource that helps brands successfully launch their franchise opportunities, these are the top five things to keep in mind.

1. Make Sure You Have a Proven System that Can Be Replicated

One of the biggest keys to success within the franchising industry is ensuring that your concept fits the model. In order to be replicated by other local business owners, brands need to create a system that can be copied over and over again in a variety of different markets. While a founder may be able to operate their business based on intuition and their familiarity with the concept that they designed, franchisees need to have a clear system laid out for them to follow in order to be successful.

“To break into the franchising industry, brands need to come up with a step by step map for local owners to follow. There needs to be a proven system in place that others can make their own,” said Steve Beagelman, president and CEO of SMB Franchise Advisors. “While that seems simple, defining every aspect of a business model to someone with no prior knowledge of the system can present quite a challenge. That’s why it’s critical to have a concept that can be replicated.”

2. Use a Consultant

There are a lot of rules and regulations that impact the direction of the franchising industry. From changing laws to the technicalities involved with creating a Franchise Disclosure Document, or FDD, there’s no shortage of things that emerging franchisors need to keep in mind when expanding their businesses. That’s why the importance of working with a consultant can’t be overstated.

“It’s difficult for experienced franchisors to keep up with the regulations imposed on the industry, let alone an entrepreneur who is just exploring the possibility of franchising. That’s where the value of a consultant comes into play—you need to be able to turn to the experts for advice whenever you have a question,” said Dawn Abbamondi, director of marketing and brand development for SMB Franchise Advisors. “After leading top brands in the franchising industry, even being franchisees ourselves, as part of the SMB team we’ve helped more than 150 brands launch their franchise opportunities.  We know the ins and outs of the business because we have been there. Our goal is to be the best possible resource for our clients who are on the verge of taking their concepts to the next level.”  

3. Build Your Business Beyond Your FDD

FDD’s play a crucial role in the franchising process. Often spanning hundreds of pages, the complex legal document contains information about every aspect of your brand’s franchise concept. From company history and trademarks to financial requirements and existing location performance records, FDDs have the ability to tell a detailed story about your brand’s franchising opportunity. But it’s important to ensure that your FDD goes beyond the paper that it’s printed on.

While FDDs take a lot of time and money to create, it’s equally critical for emerging franchisors to build their concept outside of the document. That means focusing on the every day tools your franchisees will use. These critical components of your franchise system are big items on your to-do list, including creating comprehensive operations manuals, developing training programs and establishing best practices for future owners.

4. Be Prepared for the Costs that Come with Franchising

While entrepreneurs often turn to franchising because they don’t want to be financially burdened with growing their business themselves, the industry isn’t free of its own expenses. From drafting FDDs to creating the marketing and promotional materials that are necessary to spread the word about your new concept, the costs of launching a new franchise quickly add up. That’s why it’s better to be educated about potential charges beforehand, as well as financing options that will help you stay above water.

“It’s no secret that owning a business is expensive. But one of the biggest misconceptions about franchising is that it’s cheap for franchisors,” said Abbamondi. “Creating a brand-new business ownership opportunity out of nothing requires a lot of work and if you don’t have the time to do it, hiring someone can help it get done faster, but that cost has to be budgeted.  Well informed entrepreneurs—especially those working with their own consultant—are better prepared to handle those financial burdens.”

5. Attract Top Quality Franchisees

Last but not least, one of the most critical components of every franchise opportunity is the group of local owners who sign on to develop the brand in their communities. Franchisees are at the center of every concept, and their individual success and reputation ultimately determines whether or not a brand wins as a whole. While it can be tempting for entrepreneurs to welcome any local owner into their brand who has the financial ability to open a location, it’s much better for franchisors to remain selective as they get their opportunities off the ground.

“At the end of the day, a franchise brand is only as good as the people behind it. Who you chose to partner with can ultimately make or break your success, which is why you should be selective when partnering with franchisees,” said Beagelman. “The network of local owners that you create at the beginning will create a unique culture and environment that sticks with your brand as you continue to grow. Stay true to your concept and only work with franchisees who share your same drive and passion.”

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