1851

Franchising is a tried-and-true strategy for successfully growing a business. A business owner can start a franchise by filing a <a href="https://1851franchise.com/what-is-an-fdd-2705192">Franchise Disclosure Document</a>, which allows the company to <a href="https://1851franchise.com/tips-for-preparing-your-franchise-system-for-sale-2704626">sell the concept</a> to qualified entrepreneurs who then replicate the established business model and follow the guidelines in exchange for the payment of <a href="https://1851franchise.com/marketing-your-franchise-fee-2414">fees</a> and <a href="https://1851franchise.com/nick-powills-royalties-are-greater-than-fees-2709235">royalties</a> to the franchisor.&nbsp;Now, as the world emerges from the COVID-19 crisis, there may be <a href="https://1851franchise.com/the-road-to-recovery-how-the-franchise-industry-will-bounce-back-post-coronavirus-2713099#home">a large number of qualified candidates</a> looking for new franchising opportunities. 1851 Franchise spoke with franchise industry experts to learn more about how a company can franchise its business and take advantage of this demand.<h4>How to Create a Business Worthy of Franchising</h4>The first step to creating a franchise is creating a business model with <a href="https://1851franchise.com/smbfranchising/five-questions-to-ask-before-franchising-your-business-11638">strong and consistent sales</a>. Above anything else, franchisees want to see a concept that is continuously making money over a period of several years.&nbsp;“Typically, a business is ready to franchise when they have a unit or pilot location that is performing well and the public is taking to it,” said <a href="https://frannet.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-create-and-grow-a-franchise-2715631" target="_blank" rel="nofollow">FranNet</a> Vice Chairman and Principal <a href="https://www.linkedin.com/in/bnicol?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-create-and-grow-a-franchise-2715631" target="_blank" rel="nofollow">Blair Nicol, CFE</a>. “They should have already duplicated the concept a few times, that way they have a replicable model that has been proven to work anywhere.”&nbsp;In order to create this replicable model, Nicol says first-time franchisors also need to heavily document how they’ve successfully established the concept. “Prospective franchisors need to create a system of procedures and operations that somebody else can follow,” he said. “It may not be polished or totally complete, but they need to document how the business started, how it should be run, how it should be staffed and more.”For example, <a href="https://1851franchise.com/5-common-operational-blunders-and-how-to-avoid-them-2708113">an operations manual</a> with product lists, employee handbooks, vendor tips, storefront appearance guidelines and more will need to be provided to each franchisee.&nbsp;<h4>How to Create a Franchise Opportunity</h4>Once a concept is ready to franchise, the next step is to create a business plan that outlines the number of franchises a company wants to sell, which <a href="https://1851franchise.com/how-to-find-the-right-target-market-for-a-franchise-2714703">markets they are targeting</a> for growth, how fast they want to expand and more. Prospective franchisors will also need to evaluate the amount of staffing and financial capital required to successfully sell those licenses and onboard incoming franchisees.“It is important to remember, if franchisors do this right, they are going to be in <a href="https://1851franchise.com/cost-considerations-when-franchising-your-business-2485#stories">for at least $100,000</a> in legal fees, operation manual costs, trademarking, training, registration, FDD creation, marketing and more, before they ever sign their first franchisee,” said <a href="https://www.linkedin.com/in/valerie-mccartney-87006b7?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-create-and-grow-a-franchise-2715631" target="_blank" rel="nofollow">Valerie McCartney</a>, vice president of franchise sales &amp; development at <a href="https://www.thebrokenyolkcafe.com/franchising/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-to-create-and-grow-a-franchise-2715631" target="_blank" rel="nofollow">The Broken Yolk Cafe</a>. “Most people who have only opened up one store don’t have that kind of capital lying around to spend.”&nbsp;Nicol agrees being properly capitalized is essential. “Typically, a franchisor does not become royalty sufficient until around 75 to 100 open units,” said Nicol. “That means it takes quite a bit of capital to create and grow a franchise successfully. Sometimes a franchisor will also hold on to their pilot location for too long. Oftentimes, franchisors will need to sell their pilot location and use those funds to focus on the franchisor side. ”Then, it’s time to create a <a href="https://1851franchise.com/sportclips/are-franchise-agreements-really-one-sided-4103">Franchise Agreement</a> and <a href="https://1851franchise.com/the-franchise-disclosure-document-what-items-are-most-important-2709318">Franchise Disclosure Document</a>. These documents outline the responsibilities of franchise owners, fees and tax responsibilities, <a href="https://1851franchise.com/how-to-read-an-item-19-3200">financial performance history</a>, rules pertaining to trademarking and much, much more.“Creating an FDD requires outside help,” said Nicol. “Prospective franchisors will work with a legal team and accounting team to properly outline the FDD. All financial statements and spreadsheets will need to be in a row. The FDD will also need to properly outline the initial investment to open specific locations. The legal team will work directly with the franchisor to help them establish best practices.”<h4>How to Continue Franchise Growth</h4>Once the franchisor starts selling franchise agreements, Nicol says there are several ways to promote healthy growth. “A common mistake emerging franchisors make is taking the first person who is willing to write a check,” said Nicol. “That is the wrong thing to do — the first few franchisees will be the <a href="https://1851franchise.com/what-strong-franchisee-validation-looks-like-2712150">validators for future franchises</a>. From a support level, young franchise brands also need to grow around where they are based. If a franchisor is based in Portland, Oregon, for example, the first few franchisees need to be in the Pacific Northwest to promote regional growth. The legal team will also advise franchisors where to grow in the United States based on registration states and competitive threats — a franchisor may want to come to market faster if a competitor has plans to come first.”&nbsp;From there, emerging franchisors need to hire a good, tenured corporate support team to provide ongoing support and training to all new franchisees. If growth stalls after the first few locations, Nicol recommends taking a hard look at the marketing strategy for bringing in new franchise leads.&nbsp;“Franchisors should consider <a href="https://1851franchise.com/increase-your-franchise-sales-by-using-franchise-brokers-and-consultants-3137">brokerage groups</a>, <a href="https://1851franchise.com/how-three-franchise-experts-think-you-should-spend-your-digital-marketing-budget-in-2020-2710907">digital marketing tools</a>, as well as <a href="https://1851franchise.com/people-source-people---how-are-you-leveraging-your-referral-network-2708270">tier referral systems</a> where franchisees can refer other franchisees to the brand,” he said. “Finding the right franchisees is key — if you have a good franchisee who believes in the brand and has the operational and financial capacity to expand into multiple units, for example, it can be super advantageous to the overall growth of the brand.”With the right plan in place, franchising can increase a company’s revenue through franchise fees and royalty payments paid by the franchisee, as well as expand brand recognition as the franchise reaches new markets and customers.&nbsp;

How To Create and Grow a Franchise

1851 Franchise

To start and grow a franchise, business owners need to standardize their operations, optimize their business model, hire a corporate support team, establish target markets and create an FDD.

how-to-create-and-grow-a-franchise

HomeTeam Inspection Service

Good Day Columbus: Home Insurance Expert Reveals Why Central Ohio Premiums Are Rising and How to Combat Costs

rising-home-insurance-costs-ohio

CapitalSpring

Primetime Fitness Expands Crunch Portfolio With CapitalSpring’s Backing

primetime-fitness-expands-crunch-portfolio-with-capitalsprings-backing

Children's Lighthouse

How Children’s Lighthouse Franchisees Scale to Multiple Locations

how-childrens-lighthouse-franchisees-scale-to-multiple-locations

Express Employment Professionals

Betting on Himself: How Chris Brown Built an Express Employment Professionals Franchise From the Ground Up

betting-on-himself-how-chris-brown-built-an-express-employment-professionals-franchise-from-the-ground-up

Comfort Keepers

Comfort Keepers® Named One of America’s Best Home-Care Providers

comfort-keepers-named-one-of-americas-best-home-care-providers

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Potbelly to be Acquired by RaceTrac in $566 Million Deal 

racetrac-acquires-potbelly-in-566-million-deal

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

health-care-hiring-slowdown-in-home-care-franchise-opportunities

Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

caribou-coffee-names-scott-kennedy-ceo-eyes-continued-growth

McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

mcdonalds-launches-extra-value-meals

Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

smoothie-king-food-menu-power-eats

Jollibee -Launch-Story-Brand-Page-Deep-Dive-2025

Jollibee Franchise Costs, Fees, Profit and Data for 2025

jollibee-franchise-costs-fees-profit-and-data-for-2025

Design with image of employee holding card reader and customer paying

How Smart Retail Franchises Are Winning Against Online Competition

retail-franchise-opportunities

How Network In Action Is Redefining the Franchise Model With Community, Connection and Fast ROI

network-in-action-franchise-scott-talley-interview

HomeVestors Leans On Neighborly Growth and Radical Transparency To Court Real Estate Investors

homevestors-franchise-mike-oberholtzer

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

Multi-Unit Wendy’s Operator Signs 12-Unit Deal With Layne’s Chicken Fingers

ricki-oberoi-laynes-chicken-fingers-growth

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

Design with school-aged child standing on pencil with text "Education Franchises" and "<$500K"

Top Education Franchises Under $500K To Explore in 2025

top-education-franchises-under-500k

Young Entrepreneur Parth Patel Is Bringing Paris Baguette to the Cleveland Area

young-entrepreneur-parth-patel-is-bringing-paris-baguette-to-the-cleveland-area

Cleaning Franchises Offer Stability and Scalability in a Changing Economic Landscape

cleaning-franchises-offer-stability-and-scalability-in-a-changing-economic-landscape

DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

devhub-meet-the-supplier

How To Create and Grow a Franchise

MORE STORIES LIKE THIS