How Does a Business Become a Franchise?

A business becomes a franchise by filing a Franchise Disclosure Document and selling the concept to other entrepreneurs who agree to follow the business model and pay fees and royalties to the franchisor. 

But a business doesn’t get to that point without first proving itself in the marketplace and then painstakingly documenting every process, vendor, tip, trick and best practice that made it successful.

Typically, businesses that become franchises seek consultants who can help them create operational manuals and training systems for their business. Websites like Franchisegenesis.com can provide free quotes and books like “Franchise Your Business: The Guide to Employing the Greatest Growth Strategy Ever” can help tremendously in this regard. 

A business needs to have strong growth and sales to franchise. Additionally, the concept can’t be so unique that it won’t work in other areas.

Entrepreneurs choose to franchise businesses to raise capital and grow market share. With a perfected concept, an entrepreneur can rake in cash from franchise fees and royalty payments in exchange for training another business owner to meet their standards. 

For prospective franchisees, buying a franchise provides a path to business ownership that’s significantly derisked because the existing franchises have already proven the business concept’s worthiness.