Do you have a successful small business you'd like to expand or a new concept that you think is ripe for franchising? These days, franchising is being used by more businesses and more types of businesses than ever before. Almost any product or service can be franchised. Developing a franchise concept allows you to expand your business without personally funding the growth. To be successful, a new franchise generally must demonstrate that:
- It can be replicated
- There is demand for the service or product
- Other franchise owners can make money from it
- Grant permission to use a trademark or registered name
- Providing training and ongoing support
- Provide support payments of at least $500 during the first six months of operation
Decide if your business or idea can be franchisedSome types of businesses lend themselves more readily to the franchise concept.
Hire a franchise attorneyDeveloping a franchise from scratch takes plenty of legal documents. You'll want an expert to prepare and review them on your behalf to keep you out of trouble.
Create an operations manualBefore you can sell others on your successful methods of operating a profitable business, take time to write down what it takes to run your company.
Identify potential financing sources for your franchiseesSince 90 percent of all franchises require an initial one-time investment of up to $50,000, plus royalties or ongoing fees of 3 to 6 percent, you'll want to make your franchise more attractive by making it possible for franchisees to afford it.
Small Business Administration, among others.
- The key to successful franchising is in the creation of systems that can be duplicated through training and support.
- Franchising offers great opportunities for expansion and efficiency. But building a brand takes time, so be patient.
- Before you begin pursuing franchisees, make sure your legal documentation is in order so you don't run afoul of the law.