How to Turn Your Small Business into a Franchise System

Sawan Patel December 28th, 2023

Do you have a successful small business that you want to expand and grow? If so, franchising might be the right option for you. Franchising is a business model where you grant licenses to other entrepreneurs to operate your business model under your brand name and standards. This way, you can leverage your proven concept, systems, and reputation to reach new markets and customers. However, franchising is not a simple or easy process. It requires careful planning, preparation, and execution. In this blog post, we will guide you through the main steps of launching a franchise system for your small business.

Step 1: Make Sure Your Business is Ready to Franchise

Before you decide to franchise your business, you need to make sure that your business is ready for it. Here are some questions to ask yourself:

  • Is your business profitable and scalable? You need to have a solid track record of financial performance and growth potential. Your business should also be able to operate in different locations and markets with minimal adaptation.
  • Is your business unique and competitive? You need to have a clear value proposition and a distinctive brand identity that sets you apart from your competitors. Your business should also have a loyal customer base and a strong reputation.
  • Is your business systematized and standardized? You need to have a well-defined and documented operational manual that covers all aspects of your business, such as marketing, sales, customer service, inventory, accounting, etc. Your business should also have consistent quality and service standards that can be replicated by your franchisees.
  • Is your business legally protected? You should have a registered trademark and a comprehensive Franchise Agreement that outlines the rights and obligations of both parties. You should also consult a franchise lawyer and a franchise consultant to help you with the legal and technical aspects of franchising.

Step 2: Prepare a Franchise Disclosure Document (FDD)

A Franchise Disclosure Document (FDD) is a legal document that provides detailed information about your franchise system to prospective franchisees. It is required by the Federal Trade Commission (FTC) and some state laws to be given to potential franchisees at least 14 days before they sign any contract or pay any fee.

The FDD consists of 23 items that cover various topics, such as:

  • The franchisor’s background and history
  • The initial and ongoing fees and costs
  • The training and support provided by the franchisor
  • The franchisee’s obligations and restrictions
  • The franchisor’s financial statements and performance
  • The risks and litigation involved in the franchise
  • The contact information of current and former franchisees

The FDD is a crucial document that can affect your franchise sales and reputation, as well as potential liability in connection with franchise sales. Therefore, you should make sure that it is accurate, complete, and compliant with the applicable laws and regulations. You should also update it annually or whenever there are any material changes in your franchise system, in order to continue selling franchises.

Step 3: Develop a Franchise Marketing and Sales Strategy

Once you have your FDD ready (and registered, where required), you need to develop a franchise marketing and sales strategy to attract and recruit qualified franchisees. Here are some tips to consider:

  • Define your target market and ideal franchisee profile. You should know who your ideal franchisee is, what their goals and motivations are, and what their financial and operational capabilities are. You should also research the market demand and competition in the areas where you want to expand.
  • Create a compelling franchise website and other marketing materials. You should have a professional and informative website that showcase your franchise opportunity, benefits, and requirements. You should also include testimonials, success stories, and contact details of your franchise team.
  • Use various channels and methods to generate leads. You should leverage online and offline platforms and tools to promote your franchise opportunity, such as social media, search engines, email marketing, trade shows, referrals, etc. You should also have a lead capture and follow-up system to collect and nurture your prospects.
  • Screen and qualify your leads. You should have a clear and consistent process to evaluate and select your franchisees, such as phone interviews, online applications, personality tests, credit checks, etc. You must also provide them with your FDD and should invite them to a discovery day to meet you and your team in person.
  • Close the deal. You should have a strong and persuasive sales pitch that highlights the value and advantages of your franchise system. You should also address any questions or concerns that your franchisees might have.  Franchisees will then need to sign your Franchise Agreement and pay the initial franchise fees to start their onboarding into the franchise system.

Step 4: Provide Training and Support to Your Franchisees

After you sign the contract with your franchisees, you need to provide them with adequate training and support to help them launch and run their franchise successfully. Here are some ways to do that:

  • Provide initial and ongoing training. You should have a comprehensive and structured training program that covers all aspects of your business, such as product knowledge, operational procedures, marketing strategies, customer service skills, etc. You should also provide ongoing training and coaching to keep your franchisees updated and motivated.
  • Provide operational and technical support. You should have a dedicated and responsive support team that can assist your franchisees with any issues or challenges they might face, such as inventory management, equipment maintenance, software troubleshooting, etc. You should also provide them with the necessary tools and resources, such as manuals, checklists, software, etc.
  • Provide marketing and advertising support. You should have a coordinated and effective marketing and advertising strategy that can generate brand awareness and customer loyalty for your franchise system. You should also provide your franchisees with the marketing materials and guidelines, such as logos, flyers, banners, etc.
  • Provide feedback and performance evaluation. You should have a regular and transparent communication system that can facilitate the exchange of information and feedback between you and your franchisees. You should also have a performance evaluation system that can measure and monitor the results and progress of your franchisees.

Step 5: Manage and Grow Your Franchise System

The next step of launching a franchise system is to manage and grow your franchise system. Here are some tips to consider:

  • Maintain quality and consistency. You should have a quality control and compliance system that can ensure that your franchisees adhere to your standards and policies. You should also conduct periodic audits and inspections to verify the quality and consistency of your products and services sold through the franchisee’s business.
  • Foster a positive and collaborative culture. You should have a culture that promotes trust, respect, and cooperation among your franchisees. You should also encourage and facilitate the sharing of best practices, ideas, and feedback among your franchisees. You should also organize events and activities that can foster a sense of community and belonging among your franchisees.
  • Innovate and improve. You should have a continuous improvement and innovation system that can keep your franchise system relevant and competitive in the changing market. You should also solicit and implement the suggestions and feedback from your franchisees and customers. You may need to continue to introduce new products, services, and technologies that can enhance your franchise system and help your brand remain competitive.
  • Expand and diversify. You should have a growth and diversification strategy that can increase your market share and profitability. You should also explore new markets and territories that can offer new opportunities and challenges for your franchise system. You should also consider adding new revenue streams and business models that can complement your franchise system, subject to restrictions in your Franchise Agreements.


Launching a franchise system for your small business can be a rewarding and profitable venture. However, it requires a lot of planning, preparation, and execution. By following the steps outlined here and working with your franchise attorney, you can launch a franchise system that can help you achieve your business goals in new markets.