5 Things to Do Before Franchising Your Business

Imagine you are the owner of a successful small business in your local area and community. With aspirations to grow your business and expand to distant markets, you decide to look into franchising. Inspired by world-renowned franchises like McDonald’s and Dunkin’ Donuts, you wonder what steps you need to take in order to be successful. Here is a hyper-summarized list of the steps you need to take to franchise:

1.) Organize Your Business

Whether it’s a brainstorm session by yourself or with trusted employees, organizing the business model will help tenfold in the future. Not only will the minute details be easily understood in the franchisor’s eyes, but will be passed along to future franchisees in an efficient manner. In an interview with 1851, Clay Carson VP of Franchise Development with Coolgreens, says that it’s important to lay out and organize one’s business model. Once this step is completed, the other parts will be much easier.

2.) Create Your Franchise Disclosure Document

“The FDD is the DNA of the company” – Clay Carson

The Franchise Disclosure Document is the single most important portion of franchising your business. Carson said an FDD is basically the most important governing document, noting, “It defines the company and the way it plans to do business.” Carson explained that an FDD means a lot more than just words on a page; it is how one interacts with franchisees.

In the past, Carson has seen many franchisors who did not take a careful amount of time in the creation of the FDD. This ended up hurting the franchise down the road. If constructed properly, it’ll cost a franchisor $75,000-100,000 in legal fees, making it the biggest single expense one will have.

3.) Benchmark Yourself Against Companies You Admire

“Always change a losing game, never change a winning game.” – Bill Tilden

When beginning to franchise, the new franchisor must find a company that he or she really admires. For Carson and the other executives at Coolgreens, they modeled much of their business structure off of a pizza concept and a chicken concept they admired. Carson said, “franchising is not a creative business. A franchisor must take things they see from other operators that are successful.” In his eyes, the pizza company’s internal structure was extremely sound. They follow minute details as a corporate team. This extends to how they do business with their franchisees.

4.) Make Sure You Protect Your Brand

In franchising, your brand is your identity. “Don’t bend on core values,” Carson said. One needs to be very judicious about who one chooses to do business as they should represent the brand properly.

Once a brand is at the point of opening new franchises, a way to protect the brand is being meticulous with training. Carson explained that a franchisor should never leave until you believe the training is finished. Once the right brand representatives are found, the franchisor must ingrain the core values and business processes within them. “Properly training the staff at a new franchise will save you tens of thousands of dollars in the long run,” reiterated Carson.  

5.) Take Advantage of Technology

Last but not least, one must take advantage of technology. Technology should be considered from the very beginning. Franchises operate in the technology age, and it should be utilized to automate many aspects of business. In particular, technology can be especially useful to provide franchisees with accurate and up-to-date business procedures and information. In the past, Carson has uploaded protected videos of the most critical operating procedures to the internet. This process makes it easy to update information and also to share certain non-confidential information with prospective franchisees. Instead of explaining it to them on a phone call, Carson directs prospective franchisees to a series of short clips which carefully describes the business in a well thought-out, productive manner.

If all of this is done properly, Carson estimates the investment should cost around $250,000 with the FDD being the large majority of the cost. Throughout each part of the list, a franchisee must be meticulous, paying attention to each detail. If a portion is haphazardly completed, it may be the factor that determines the success of a new franchise.