Many established businesses believe that they can transform into a successful franchising venture. Unfortunately, most don’t have a solid plan in place on how to achieve this.
Some people try to handle all these aspects themselves and engage the services of a lawyer who sometimes also acts as their consultant. Others take the DIY effort a step further, try a shotgun approach, and end up failing miserably in the bargain.
Here we look at the steps involved in setting up a franchise business:
This specialist’s job is to use various methodologies as needed, including strategic network planning, territory planning, and site selection policies to help the potential franchisor move forth with the next steps.
You would have to do your due diligence or carry out a feasibility study to prove that the concept you have is workable. Trailing the concept is a vital aspect of the process and it’s something that investors will check when you approach them for capital investment.
The costs involved in developing a workable and successful franchise network can be in the range of $40,000 to $100,000. If you think you can manage this more cheaply, you would just be setting off on the wrong foot.
You can either hire a professional who has the necessary templates, or tackle this aspect yourself. There are things apart from printed manuals to think about, as many people prefer accessing information online these days.
This means you have to consider what your franchise would look like five or 10 years down the track and the locations you would expand to. The step can potentially help you avoid making costly mistakes; it can be prohibitively expensive either close or leave a store. In addition, if a particular store proves to be a disaster, you would have to demonstrate the process you followed to make the decision; it can be expensive to deal with lost court cases.
You need to determine which store locations would work best for you. Depending on the type of business some factors to consider include traffic (pedestrian/vehicle), parking, access, visibility, size of the store/outlet, local generators etc.
As a franchisor, you would have to grant territories. This aspect is particularly crucial if you would be working on a concept where the leads come via online channels or the phone and the orders are dispatched from a centralised location. Decide what the territory size will be and the number you want in each market. When you plan the territory demarcations well, you will find it easier to grow your business.
The right marketing plan is crucial to the success of your business. You must determine who your potential customer is and make decisions on how to locate them, inform and attract them and encourage them to call and place orders or opt for your services.
You have the option to find sites yourself or hire professionals for site finding as they have the skills to negotiate with real estate agents and leasing agents.
It’s important to work with a skilled lawyer who would help you draw out your franchise agreements and disclosure agreements. These documents must be in line with the things you will be offering the franchisees and there are several major decisions involved.
In addition to all of these things, you also need to attract potential franchisees. Review all your options and determine the best plan of action. Judge whether you would be able to and want to handle lead generation well or whether it’s best to hire a specialist to qualify franchisees on your behalf.
You would also have to decide on a process for approving, profiling and interviewing franchisees. Matching them up with the right site is crucial. Plan store fit outs, training methods and store openings.
For more information, feel free to call the experts at The Franchise Institute. You can call us on 1300 855 435 or fill-in this contact us form, and one of our experts will contact you as soon as we can.
Thanks for reading,
The Franchise Institute Team
1300 855 435