How to Franchise A Business: Make Your Small Company a Franchise

Chelsy Meyer  | 

Starting your own business is a gamble, but if your business is so successful that you consider franchising it, that gamble has certainly paid off. Deciding to franchise your business means you’ve created a product, business model, and achieved profitability that you believe you can duplicate. You have one successful location already, and enough demand to warrant opening more.

However, before jumping into becoming a franchisor, there are some questions to ask yourself and expectations to set. Franchising isn’t easy. You’ll need to look into your potential for success, get legal help, do your research, and standardize your procedures and reporting. Then you’ll want to learn how to find the right investors and franchisees that will work for you.

Questions to Ask First

Turning your business into a franchised business chain is not a small undertaking. For that reason, it’s important to ask yourself some questions before jumping in. The investment is a gamble, so it’s best to be cautious and conservative about your numbers and their ability to be duplicated in another location. Before jumping into the world of being a franchisor, ask yourself if your business model can be duplicated, if your practices are standardized, and if your business is successful enough to profit both you and your franchisees.

  • Can I Duplicate My Small Business Success?

This is an important question, because the very core of a franchise is its ability to be replicated for success in multiple locations. Your business model has to fit many different variables. There may be parts of your model that you can’t replicate like a prime location, lack of competitors, or success linked to local ties. The question has to be why your business was successful, and if you can replicate that success in another location.

  • Is Everything Standardized?

One of the key components in making a franchise work is its ability to duplicate service, products, training, materials, brand, and advertising. Each franchised location is basically a carbon copy of the original inside and out. Everything must be standardized. For franchisees, these tools are key in their success as well. They need to understand how to replicate the original for their location to replicate that success.

  • Am I Successful Enough?

A franchise can’t exactly be created from a business that isn’t successful and profitable. For the sake of you and your franchisees, you’ll need to be sure your model is successful enough to duplicate. Not only that, but the initial cost of franchising can be steep, so the stakes are high and capital is needed in order to fund a franchise product or location and to prove franchise worth.

Becoming a Franchisor: What You Need to Do

The beginning stages of franchising a business are full of hard work and trial and error. Similar to opening a small business, the first few years are especially difficult and need time to start building profitability. Becoming a franchisor involves so many steps, it’s best to get organized and make a plan for what you need to do.

  • Get Legal Help

Getting legal help is a crucial step in the franchise process. An experienced franchise attorney will help you maneuver through the necessary documents needed for disclosure by the Federal Trade Commission, registration requirements in your state, franchise agreements, and intellectual property protection, among others. The legal needs can be overwhelming, and filling out paperwork wrong can be damaging, so it’s best to start with legal help.

  • Do Your Research

There are many pros and cons to becoming a franchisee, but one of them is the research conducted by the franchisor. This means conducting extensive research on the competition, location, and standards. This research will help weed out poor opportunities and ideas not conducive to success. This is a valuable step in the process that will help support future franchisees.

  • Create Standardized Accounting and Reporting Systems

One of the questions to ask before franchising is if everything is standardized. Making your accounting and reporting operations uniform will help your franchisee in creating a profitable business, and will help make training a lot easier.

  • Build Your Training System

Access to resources for training is an important aspect in the franchisor/franchisee relationship. This involves creating a standardized system of training that can be repeated for all future franchises and their employees. If you don’t have a training system that has been standardized, it’s time to build one that can be duplicated at each location for each position.

Know How to Pick Winners

An important aspect in franchising a business is finding the right investors and franchisees. These people are so important in creating a new location that will be successful. For this reason, it’s important to pick winners from the pool of possibilities. Some important aspects to consider in franchisees are capital, experience, and partnership. Create a job description and set your standards high.

Some of the most profitable franchises are able to build profit because of strict franchising requirements that franchisees must meet. This not only protects you as the franchisor, but also the franchisee looking to invest in your model. You should be your number one priority, so be sure to pick winners so that you aren’t gambling with the success of your brand. Plus, the more successful your franchise locations are, the more people will want to partner with you. Successful franchise partners can give you a larger pool of potential partners to choose from in the future.

Franchising is an exciting and rewarding step for any business as long as it’s done correctly. Failed franchises can end up costing a fortune and tanking the profitability of any business. For this reason, it should be a decision made cautiously. Not all businesses are meant for franchising, and if yours isn’t, thats okay. There are other ways to increase growth and profitability that don’t involve franchise locations.

Asking yourself the hard questions and being honest about what a franchise will take will ensure you’re making the right decision for you and your company. If you are able to franchise your business, be sure you do it the right way. It may take longer and cost more initially, but you’ll thank yourself for taking the time to ask the right questions, get legal help, do your research, create standardized procedures, and find the right franchisee.


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Chelsy is a writer from Montana who now lives in Boise, Idaho. She graduated with her journalism degree from the University of Montana in 2012. She enjoys talk radio, cold coffee, and playing Frisbee with her dog, Titan. Follow Chelsy on Twitter @Chelsy5

This post was updated February 2, 2018. It was originally published February 5, 2018.