First thing to note is that you cannot franchise an idea; you must have a business which is proven to be successful. Before you can embark on a full scale franchise operation, you should first test that your business is indeed franchisable and the best way to do this is to run a “pilot”. Running a pilot involves putting together a manual on how to operate your business and then essentially getting a third party to follow those instructions.
If you haven’t already protected your brand, you should look into registering your name, logo and any other intellectual property that you have developed. It is essential to undertake proper research, to ensure that the name you have chosen is actually available. If you choose a name that someone else is already using then not only can that potentially make it harder for you in the future from competition and marketing perspective but there may also be a risk that if that other business was using the name for longer. If this is the case, they could take action against you, and if they are successful, you would have to change your name. Trade mark protection is limited in geographic scope so if expanding overseas you will need to ensure that your trade mark is registered in your target country and if, relevant, the translation works in the local language. Don’t forget about domain names! Like it or not but we live in an online world. Telephone numbers are no longer as essential as they once were. What’s far more essential is having an online presence. Make sure you have purchased all relevant domain names and reserved the social media handles.
You will also need to consider how you train your franchisees; you will need a franchise agreement and you will need to have thought about what your franchise territories will look like.
Becoming a franchisor requires finance – this may be obvious but starting to franchise is an investment and whilst franchising can be a very profitable way to expand, you will need to invest before you will start to see a return. Get quotes and be realistic about the available finance you have or what you can raise and don’t fall into the trap of thinking you can do this on the cheap – those who have tried will tell you that you’ll end up spending much more in the end if you don’t do it right from the beginning!
In addition to the operations manual, another key document that you will need is the franchise agreement – this will be the main contractual document between you and your franchisees. It is important to get it right. There may be some other documents to consider too – like a confidentiality agreement or a deposit agreement.
