How to Franchise a Service Business

Franchises in the service sector include various important businesses, from senior care to home repairs, pest control and more. What differentiates these types of businesses is that they provide a service to their customers rather than a product.

Franchising a service business is not so different from franchising other types of brands, but a few unique nuances can go into the process.  

Where to Start

Franchising a service business should begin with a proven business model that has shown consistent sales. 

“Service businesses looking to franchise should meet similar criteria to any franchise business — a model that has proof of success and is able to be replicated,” said Corey Elias, founder of Franchise Captain. “They must know their customer and how to reach them so they can be successfully targeted in other markets throughout the country.”

Elias added that systems and processes need to be ironed out so that even a person who has zero knowledge about a specific industry can run the business successfully. “This means the training on how to be an owner is very well thought-out and documented,” he said. 

Additionally, owners should prepare to prove the potential of a business, according to CHRON. This can be done by creating detailed reports about profitability.

Consider Multiple Locations

It might be a good idea to already be branching out to other locations before franchising. Having two or three other sites will help work out any kinks in the replication process. It will also be more impressive to potential investors, particularly if the business is open in multiple markets. 

Create a Business Plan

Once a business owner has decided to franchise, it’s time to create a business plan. This should outline the number of franchises the owner is looking to sell, which markets will be targeted, how fast they are looking to expand, and more.

During this time, it is also necessary to build a pricing structure, including elements such as how much will be charged for a franchise fee and whether equipment/supplies will be provided. Prospective franchise owners will also need to determine how much staffing and financial capital will be needed to sell licenses and onboard incoming franchisees. 

Prepare Documents

Next, a Franchise Agreement and Franchise Disclosure Document should be prepared. Prospective franchisors will work with legal and accounting teams to properly outline the important documents. 

These will outline the responsibilities of franchise owners, fees and tax responsibilities, financial performance history, rules pertaining to trademarking and more. The Financial Disclosure Document should also properly outline the initial investment to open specific locations. The legal team will work with the franchisor to help them establish best practices.

Marketing

Once franchising has begun, marketing is one of the best ways to promote growth. Since service franchises usually don’t have the same prime location franchises as restaurants, for instance, promoting through aggressive marketing is key. 

According to Elias, quality digital and gorilla marketing strategies can help ensure customers hear about a business. Marketing strategies must clearly highlight the unique personality and differentiators to make a lasting first impression on consumers.