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How to Franchise

We’ve put together some of the best advise available on how to franchise, because we do this full time, have seen the successes and (fortunately or unfortunately, whichever way you look at it) have been the victims of franchises gone bad.

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Like most business models, there are stories of great franchise successes (McDonalds in fast food, General Motors in car sales) and great stories of spectacular failures (unfortunately, because they failed, we never got to hear of them!). Many entrepreneurs have gone down the franchising road, they’ve made the mistakes and learned the hard lessons so you don’t have to.

We’ve put together some of the best advise available on how to franchise, because we do this full time, have seen the successes and (fortunately or unfortunately, whichever way you look at it) have been the victims of franchises gone bad.

But before we look at How to Franchise… here are two important points.

1. Get Help.. (otherwise entitled “No, you can’t do this on your own!”)

Ok, to be honest, you need to know How to Franchise. If you don’t know How to Franchise then get a professional that does. If you were on the operating table you would hope and assume that the surgeon knows how to operate and has experience in their field. In the same way, you’re about to perform surgery on your business, so get a franchise consultant that has the skills and experience and knows How to Franchise.

2. Be Serious !!

Franchising a business is not something to be taken lightly. It requires skill, dedication and commitment (time, financial and emotional). The rewards for the franchisor and franchisee in successfully franchising are great. The negative repercussions of an unsuccessful franchise venture are also great – but in a negative way.

The good news is that successfully franchising a business is a straight forward, definable process and provided it is done properly, without cutting any corners, will result in a highly successful business venture.

Ok, so you made it this far…. So here is some advice on How to Franchise….

Is there are sustainable demand for your service or product?

If you’re not selling a product or service and banking money, you’re selling potential. You can’t franchise potential. Prospective franchisees want to see a proven sales record with a steady supply of customers for their new business. They want to assured of the long term sustainability of your business in all locations and all economic conditions.

Can you manage the Franchise?

Any business requires strong leadership at its core that provides on-going support and training to franchisees. Like any effective business your management team should be composed of both internal managers and qualified outside consultants with a deep understanding of your industry, as well as knowledge of the unique legal and business aspects of franchising.

Have you got the money?

Like any business, more capital and more time are required than first budgeted. Maintaining sufficient capital is crucial to the success of the franchise. Don’t expect to see big profits in the first month. Your profits will come after a year or so. Your royalty income will be minimal, and much of the income from franchise fees will be reinvested in training, marketing, and paying down debt. There is finance available to cover franchise costs so that the effect on your cash flow is minimal. Find a Franchise Consultant that can offer finance as part of their service to you.

Secure your trademarks and intellectual property.

Branding and brand recognition is everything (i.e. McDonalds, Coke and Mickey Mouse). Your success lies largely in your ability to distinguish yourself from competitors—to promise customers an experience they can’t get anywhere else. You must take all steps required to set your brand apart from others and protect your brand. You also need to protect your trademarks, trade secrets, business methods, copyrights, patents, and more.

Be profitable.

People buy franchises to make money. You can’t franchise potential, only profits. The value of each franchise unit is directly proportional to the forecast profitability of that unit. Be profitable first; then think about franchising.

Know your competition.

In any competitive environment, knowing the every changing landscape is crucial for your success. You need an up-to-the-minute understanding of both competing franchisors and competing independent businesses. This will help you strategically position your products or services so that you are easily identifiable by both prospective franchisees and customers alike.


A comprehensive disclosure document, together with comprehensive manuals are the foundation of your franchise. If these are not well drafted then you run a high risk of the franchise failing or falling over in a legal dispute. Make sure you have comprehensive legal documentation that reflects your company’s business strategies and operating policies.

More Paperwork..

You’ll need to produce an operations manual. There is no substitute for an excellent, exhaustive, well-written operations manual. It’s your crucial tool for ensuring that franchisees operate your franchise according to your wishes, in a way that is profitable and protects your business’ good reputation.

And Yes, More Paperwork….

Along with the operations manual, your training program is your opportunity to make sure franchisees and their employees do things the right way—your way. Your training manual needs to be comprehensive. Don’t assume that people see the world your way and will do it like you do. Document every step of every process precisely.

Establish an effective franchisee profile and screening system.

Let’s be honest, many people think that they are capable of much more that they really are. Many people dream of running their own business, but far fewer have what it takes to do it well. You’ll want a solid process for qualifying your franchisees based on their finances, business acumen, and character. You’ll need a comprehensive system to screen franchisees so that you can be assured that you are getting the cream of the crop.

Set up effective reporting and record-keeping systems.

If you can’t measure it you can’t manage it. You’ll need to setup up real time reporting and accounting systems. This helps you routinely evaluate the performance of your franchisees and ensures that royalties are reported accurately and paid promptly.

You can’t over communicate.

Build strong, open and honest communication channels with your staff, franchisees and suppliers. Open, routine dialogue with your franchisees builds connections, reduces conflict, and minimizes the chance of problems.

Market, market and when you have finished… do some more marketing…

Franchisees will look to you for local, regional, and national marketing campaigns that increase sales and promote and enhance the brand. Your national marketing should be based on the measurable successes of your own local marketing programs. Your campaigns will be aimed at customers and also at new prospective franchisees, so you can keep your business growing.

So that is just some advice on How to Franchise…..

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