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How to Become a Franchisor? 6 Things You Want to Know Before You Start

Strategic Franchise Development • Aug 12, 2020

Do you own a small business? Have you had success in opening a few stores in your area or your state?

If you're looking to expand your business at a rapid pace, franchising may be the way to go. If appropriately managed, franchising can pump in profits for your business.

By following a few simple steps, you can learn how to become a franchisor. Becoming a franchisor can be a rewarding experience.

Like any experience, there are lessons to learn. Our goal is to help you understand what you want to know about the process.

What You Want to Know About Franchising

According to the Census Bureau, franchising is on the rise, and it's not just fast-food restaurants. According to the report, franchising has become famous for industries like:

Janitorial services
Beauty salons
Fitness and recreation centers
Real estate agencies and brokers
Snack and non-alcoholic beverage bars
New car dealers
Hotels and motels
Full-service restaurants
Gasoline stations and convenience stores
Limited-service restaurants

So many times, we tend to think of big fast-food chains, but evidence indicates a move into other business sectors. Do you own one of the types of businesses above but never considered your type of business being right for franchising.

We hope this opens your eyes to the possibilities. Even if your type of business isn't on this list, it doesn't mean it's not a good industry for franchising. Could your business be the next big franchise?

Here are six steps to consider before franchising your business.

1. Get Organized

Great franchises have a series of systems and processes that make their business scalable. Before you can consider franchising your business, it's a good idea to sit down and think about what systems and processes your business has that make it easy to implement and duplicate.

You may want to create an operations manual for franchisees to reference policies and procedures. Establish an approval process so you can sign off on important decisions.

2. Hire a Lawyer

If you've never franchised before, you'll need to hire any experts or start witnesses involved with the case. You'll want to fill out a Franchise Disclosure Document. You'll want to have the lawyer's help as you understand the requirements for franchising, setting your pricing, creating your process agreement, and determining any intellectual properties you need to protect. If you want additional resources, you can use the International Franchise Association site to help.

3. Be Selective

You'll want to be very selective when it comes to choosing your first franchisees. While it may not be difficult to find people who have capital, you should be most concerned with finding the right people.

You'll want to ask yourself if they are the right fit for the company? Do they embody the brand's mission and core values? Do they have the requisite skills to run a business?

Your first franchisee can set the tone for the rest of your franchise businesses, so it's important to get it right. Any negative press about a franchise can affect the brand, and that's you.

4. Build Your Brand

A franchisor is no longer a struggling upstart, even if feels like one. It is a brand. You must protect it and build it.

That takes a solid plan and precise execution to establish a brand that people will connect with. Your brand is your mission as a company, how you treat employees, and most importantly how you treat the customer.

The people that represent the brand should be following that same message. It important that your brand sends a cohesive and clear message. Franchises follow the tone of the brand if there is no clear roadmap, they may build their own.

When someone walks into a franchised store, it should be the same experience no matter where they go. They should get the same service, the same quality of the product, and the same brand messaging.

This should also be reflected online. As the brand's culture center, you should be tracking the brand online through all social media platforms. Do not let others use your branding materials in a different way. Monitor videos about the brand.

While this may sound overprotective, or micro managerial in nature, your brand is what people are buying, and without it, they'll shop elsewhere.

5. Decide Where You Want to Grow

While it may be appealing to franchise anywhere, you want to be strategic about how you grow, how you scale, and where you locate your business. For instance, if you're based on the east coast, it doesn't make sense to start franchising on the west coast, unless your brand is somehow marketable there.

You may want to consider keeping your first franchised businesses close to home so you can check in on them, nurture their relationship with the brand, and help them grow.

Select an area that is close, but not so close it hurts the original stores. You want to be able to oversee from a distance. If you're are considering far away locations, you may want to choose locations that are accessible to the airport, to make checking in easier.

6. Support the Franchises

As you have established a few franchises, you'll want to spend some time at each location to establish rapport, help communicate expectations, and support and nurture their successes.

You'll want to establish a way for franchisees to communicate with each other. Building connection between locations helps to establish the brand. If franchisees know what other locations are doing, they can use what's working and discard what's not.

Be the north star for the brand and help keep franchises on brand and consistent throughout all locations. Celebrate successes and validate teams.