Becoming a franchisor
There are several steps which potential franchisors should take:
- Seek expert advice from the British Franchise Association (bfa) and attend a session of the bfa's one day Franchisor Seminars
- The bfa can provide introductions to accredited consultants, solicitors and accountants experienced in franchising who meet the bfa’s ethical franchising standards and can help you identify whether or not your business is suitable to franchise
- Research the market to ensure that products and services are competitive and distinctive enough to be franchised and that customer demand is sufficiently widespread
- Produce a business plan outlining proposals in full and including a detailed SWOT analysis
- Protect all intellectual property rights by registering trade marks, trade names and patents with the relevant trade mark and patent offices
- Test the franchise in the form of a pilot operation lasting at least 12 months, ideally longer if the business is in any way seasonal. The pilot scheme should be undertaken at more than one location in order to test the concept in different geographical areas. A comprehensive pilot operation will prove the viability of strategy and approach, highlight problem areas, and enable the franchisor to fine-tune the package before fully committing to developing a network
- With the pilot operation running successfully, the franchisor can prepare and launch his network. At this stage the franchisor should instruct a solicitor familiar with franchising operations to draw up a comprehensive franchise contract setting out the obligations of each party - including how the fees, mark-ups on supplies and any other payments from the franchisee are to be calculated. These obligations should be made clear at the outset of any agreement with a franchisee, to prevent possible conflicts in the future
- Produce a prospectus to attract suitable franchisees and to determine the criteria for franchisee selection
- Produce a comprehensive operations manual and training programme for franchisees – this will enable the franchisor to set and maintain standards of customer service throughout the network
- Establish a central management function and, possibly, field support staff to support the franchise network, and set up a system to monitor the performance of franchisees
- Develop a marketing, sales and advertising strategy to promote the franchise network, especially when competing with rival companies of whose services potential customers are fully aware
The franchisor will need to commit substantial amounts of time and money before their income stream begins - for market research studies; pilot schemes; promotional material explaining the benefits of the franchise to potential franchisees; selection and training of franchisees; production of an operations manual; formation of a central management team; initial stock and equipment, as well as for the launch of the franchise network and associated advertising.
Once the network is up and running, the franchisor and the central management team need to constantly monitor the performance of the outlets. This helps to ensure that quality levels are maintained and to identify and assist any franchisees who are in difficulties. A franchisor's on-going commitment, through training, product development and other support, is vital to the success of the franchise network.
Don't forget to demonstrate your ethical approach: Join the bfa