On Monday, we focused our blog on determining if your business is right for franchising. If you find yourself as a business owner who is pondering that question, click here to check out our questionnaire and see where your business falls in the readiness spectrum. So if you went through our post and thought to yourself at the end, “it sounds like I’m ready to franchise,” this next series is for you! The idea of franchising your business is exciting to start, then overwhelming as the reality of the requirements that need to be met comes into effect. Fortunately for you, we are creating a mini-series on steps to franchising your business. Of course we always recommend consulting a business professional with prior experience to assist you in this process, but we at least want to give you a better understanding of what’s coming your way when you take on this project.
The first step to franchising any business is to prepare. Franchises are regulated on a federal level and, in certain states, on a state level as well. If your franchise is not structured properly, you may face certain legal consequences that will likely negatively impact your growth and brand. In order to avoid this scenario, you will need to do a complete review of your business to make sure you are properly framed to grow your business through franchising. We have curated a list below of different ways you can prepare your business for franchising:
Business Structure and Entity Setup: Whenever you turn your business into a franchise, you need to be thinking about how it is structured from a legal and accounting perspective. Oftentimes, that requires setting up new and different legal entities and business structures to help in limiting your liability and facilitating strategic growth. You will need to develop a plan for how different entities will operate within your system and map out their plan for what falls within them before you become a franchise.
Trademarks and Intellectual Property Protection: One of the most important items needed in order to sustain long-term growth under the franchise model is to have strong trademarks or “Marks.” These Marks help you with your brand identity and, therefore, are a great example of an important piece of intellectual property that needs to be protected. As a franchisor, you will have to provide proof to your franchisees that your Marks are lawfully registered and maintained in order to operate so this is a huge step to franchising your business. You should consider registering your brand name and any subsequent images or phrases tied to your brand.
Operations Manual and System Creation: In order to grow your business through a franchise model, you need thoroughly vetted systems and procedures. One of the most important aspects to franchising your business is having a well-mapped-out Operations Manual specific to your franchise that serves as a go-to guide for your franchisees. This is the all-encompassing manual that handles everything from personnel procedures, advertisement, daily operations, and everything in between. You don’t want to have your phone glued to your ear every moment of the day because a franchisee has a question. The better way is to draft an Operations Manual that you can hand to a franchisee and (theoretically) satisfy any question they have on the business operations.
Workplace Policies and Procedures: An important part of turning your business into a franchise is understanding from the outset that you are entering into a whole new type of business. No longer will you be limited to overseeing locations on a micro level, but you are now going to have a team of people to help you with marketing, management, and operations over the franchise as a whole. Begin establishing your corporate team to help you with finding and vetting quality franchisees and seeing your franchise into fruition.
Apply all of these concepts, and you will be off to a great start to franchising your business! You can never be too prepared, and with something as serious as franchising your business it is crucial to have all your ducks in a row before you dive into the dense process of franchise registration. Franchisors of the world – what are some ways you wish you would have better prepared your business for franchising?