Thinking about Franchising Your Business?

As a successful business owner, you probably get approached frequently by people asking you if they can operate a business like yours “back home.” You are probably flattered by the attention and consider how you can help them go into business, for a fee, of course. What you are probably thinking about is called “franchising.”

If you are considering franchising, you should make sure that you have your ducks in a row prior to launching your franchising efforts. Franchising a business prematurely is likely to result in failure, a waste of time and money and, worse yet, litigation. Take the time to properly refine and institutionalize your business operations and develop an infrastructure for the franchise system. The following steps will put you in the best position to offer a viable franchise opportunity and help your franchise system succeed.

Brand Recognition

Brand name recognition is the cornerstone of a franchise system. Your brand name should be strong and registered on the principal register of the U.S. Patent and Trademark Office (the “USPTO”). You should confirm the availability of your brand name and discuss the strength of your brand name with a trademark attorney. He or she can then apply to register your brand name with the USPTO.

Methods & Systems

Refine your business methods, systems, marketing and advertising practices and trade dress. Locate local, regional and national vendors and suppliers for food products, furniture, fixtures and equipment. Evaluate them in terms of price, quality and customer service. Work the kinks out of your methods and systems. Establish best practices. Track the results of your various marketing and advertising efforts. Improve the economics of your business to make it profitable, particularly after your prospective franchisees pay your franchise fee, royalties and advertising payments.

Standardization

Institutionalize your business methods, systems, marketing and advertising practices and trade dress. Standardized recipes, prep guides and operational procedures are necessary if the product and service offerings will be consistent (and consistently good) from unit to unit. Standardization is also necessary for the franchisor to teach its franchisee how to establish and operate the business. Franchises will appreciate and benefit from proven marketing and advertising practices. Trade dress will streamline build out and enhance brand name recognition.

Operating Manual

Prepare an operating manual. The task of memorializing the key operational and managerial processes that only exist in the business owner’s head into an operating manual is a significant undertaking. It conveys the essential information that your franchisees need to know about operating the business to protect the franchise system and the goodwill associated with your trademarks. This includes things like recipes, opening and closing procedures and crew member responsibilities. It is critical, however, that the operations manual does not cross the hazy line that might result in your being liable for your franchisees’ operations. The operating manual must not dictate the details of running the day-to-day operations of the franchised unit, other than the essential information that your franchisees need to know to protect the franchise system and the goodwill associated with your trademarks. In addition, the operating manual must not dictate the terms of the franchisee’s relationship with its employees.

Training Program

Establish a training program for your business. The training program teaches your franchisees how to operate the business. It also teaches franchisees how to be business owners. Again, in the context of a franchise system, it is critical that the training program does not cross the hazy line that might result in your being liable for your franchisees’ operations.

Visual Language

Have a web design professional create or expand a website for your business. It takes several months to establish a presence on the web. Make sure your website can be expanded to accommodate your franchise system. Have your webmaster utilize current SEO and SEM techniques to improve your presence.

Support

Decide what initial and ongoing support and benefits you will provide to your franchisees. Site location and evaluation services or a list of required site criteria? Architectural design services or prototype plans? Tenant improvement build-out services or assistance, or prototype plans? Established sources of supply? Bulk purchasing power? FF&E brokerage or ordering services or a list of specifications? Marketing or local advertising services? R&D with respect to new product offerings? As you can discern, the list can be exhaustive. What will provide value to your franchisees? How can you favorably distinguish your franchise system from the competition?

The key elements of a successful franchise system are a successful business model and a franchisor’s goal to make its franchisees successful. Doing your homework in advance will put you in the best position to offer a viable franchise opportunity and help your franchisees succeed.