Does your business have a competitive edge? Do you have a profitable business? Can it easily be replicated? Do you have a business process that is proprietary yet uncomplicated? Do you wish to expand your business but lack the necessary resources such as time, manpower and capital to do so alone?
If you have answered yes to any of the above questions, then franchising is something that you should seriously consider.
The most popular form of franchising today is known as “business
format” franchising. Business format franchising is
where the franchisor licenses the use of the franchisor’s
product(s) and/or service(s), interior/exterior design (if
applicable), imagery and trademark(s). The franchisor also
teaches the franchisee the entire business system including
marketing, sales, inventory, accounting and personnel procedures.
Additionally, the franchisor supports the franchisee via training,
ongoing support and communications throughout the duration
of their business relationship. Two examples of business format
franchisors are McDonald’s Corporation or Subway Restaurants.
The one key advantage to franchising is that you do not need your own resources. All you need is a successful business system and the resources from the franchisor to train and support your future franchisees.
If you have all of the above, here’s the most important
thing that you will need: You need to care about your franchisees. You
have to be dedicated to helping them succeed and constantly
improving their profitability, business concept, product(s)
and/or service(s). If you do not care to help others succeed
then we do not recommend franchising and we would not take
you on as a client. People will be depending on you a great
deal once you decide to become a franchisor. In many instances,
franchisees will be investing their life’s savings to
become one of your franchisees and their livelihoods will be
at stake. You as a franchisor cannot guarantee a franchisees’ success
but you should be able to guarantee that you will do everything
you can to help your franchisees succeed. From our experience,
the franchisors who sincerely care are usually the most successful.
The attractive part of franchising is that franchise owners
will utilize their own capital to duplicate your business concept.
What’s most attractive is that you will also be entitled
to royalty fees. Depending on the type of business, royalty
fees generally range from 5% to 14% of a franchisees’ gross
sales. However, there are exceptions. You may have the type
of business that would be best developed as a “product
franchise” rather than a business format franchise. Many
product franchises do not have royalty fees in place. Product
franchisors simply make their money from selling their product(s)
to their franchisees. Franchisees then resell the franchisor’s
product(s) for a profit under the franchisor’s name and
trademark(s). In some instances, product franchises are not
actually franchises but rather distributorships.
Related Information:
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