The franchise support system
One of the biggest practical differences between a simple distribution scheme and a fully fledged business format franchise is the extent of the initial and continuing support services offered by franchisors to franchisees.
Franchisors take on responsibility for product and service development, for national promotion and PR, for purchasing financial and administrative services, for quality control and national accounts, for network communications and discipline. The skills involved are not the same as those required by field managers in company owned networks and there is an investment involved in making sure the necessary support services can be delivered to your first franchisee as well as your fiftieth.
The extent of support offered varies according to the type of business and according to how it is structured. A job franchise network (where, for example, the franchisees do the drain cleaning) will offer extensive administrative and financial services to its franchisees. A management franchise (where the franchisees employ and manage) will not be so much involved in the day to day administration but will be providing training to franchisees on, for example, recruiting and selecting staff, amongst many other services related to supporting management functions.
You will also need to make sure that your franchised business is structured so that your franchisees need your services on a continuing basis and, consequently, will want to go on paying you to belong to the network.
Professional advice at the outset could save you a great deal of money and trouble in the long run.
Go to step five: The franchise agreement