For the Franchisor, a well thought out Franchise system can be the key to an early retirement whereas a poor, ad hoc Franchise system can quickly devourer your previously successful business. I have helped grow many successful business ideas and concepts to "FRANCHISE" status, and generally some keys to the success of the Franchise are:
Have a solid, reproducible business system - Your Franchise is not worth buying if it cannot be reproduced and copied. Business owners who do not have the ability to develop instruction manuals or business models which rely on the unique skill of the business owner will have difficultly passing on that knowledge to Franchisee.
Don't expect to "sell out" - Your business has been successful because of your efforts. Similarly, your Franchise will only be successful if you devote similar effort to the support of your Franchisees. Go to the Franchise Shows, market to your target owner (just like you marketed to your customers).
Get a good lawyer - Franchise Law is unique in the world of legal disciplines, blending the old law of leases and tenancies with the relatively new law of intellectual property and licensing. It is essential to any Franchisor to engage the service of a lawyer who knows both sides of the fence and understand the considerations unique to franchising.
Protect your Ideas - This is something that is always business specific but at a minimum, you need to: a) require a non-competition and non-disclosure agreement from all managers and, key employees and b) trade-mark your brand as early as possible. Even if your not thinking of Franchising "right now", without these basic protections in place you will see your great business concept in the hands of your competitor.
Get a lay of the land - You were successful in your hometown, in part, because you chose a great location for your business. When you franchise you will be opening stores in "foreign territory". Enlist the help of local commercial realtors to ensure that the location has the traffic and reputation the location needs to be a success.
Don't get greedy - Your ultimate success as a Franchisor is "shared" success with your Franchisees. If you set product pricing too high or ask for royalties which are higher than the industry average, you will be inhibiting your own success and making your Franchisors slaves to their own stores. Generally successful Franchisors have Franchisees who have become wealthy by being store owners and, in many cases, they will own multiple shops.
Copyright (2008), Peter Borszcz
Tuesday, October 28, 2008
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