Preparing Your Business for Franchising

Joe Fittante March 9th, 2017

There are various steps you should take to ready your business for franchising. Many of the steps will add value to your existing business so even if you do not ultimately franchise they are still worthwhile. In any event, by completing these steps early in your franchising journey you will have a head start on overcoming some of the biggest obstacles to rolling out your franchise system.

  • Trademark Search and Registration – Have a trademark search run by a competent professional to determine if there are other users of your trade name and if there are, determine if their rights are senior to your rights. Assuming the search uncovers no third party users with senior rights, have filed on your behalf a trademark application at the United State Patent and Trademark Office for registration of your trademark. It can take between 18 and 24 months for a trademark registration to issue, but once completed will provide you with increased trademark protection for your brand and provide benefits to you in the franchise registration process.
  • Systematize your Operations – Take an inventory of your business systems so that you can systematize your operations. Systemization of your operations will presumably allow you to operate your business in a more efficient manner. If you do decide to franchise, it will also allow your franchisees to be able to efficiently deliver uniform goods and services of a high quality, regardless of the market or other conditions. In that regard, it will also make it easier for your franchisees to operate independently without having to consult you on each and every operational matter.
  • Create Your Standards Manuals – As a franchisor, you will provide your franchisees with at least one manual that they will use to operate their businesses. In fact, most franchisors include the table of contents of their manuals in their Franchise Disclosure Documents so that franchisees can review the topics covered in those manuals prior to the purchase of the franchise. Depending upon various factors, including the complexity of your business, whether you are converting a corporate manual, and the amount of help you have to create the manual, it will take at least 60 days to complete this task. Most franchisors underestimate the time and effort it takes to create the manual so the sooner you begin working on it the better.
  • Allocate Responsibilities – Franchising is a business separate and apart from the operation of your company-owned units. The sooner you understand this, the higher the probability of your success in franchising. Franchising takes time and effort and if you are focusing on your company-owned operations to the detriment of your franchise system you will be unable to grow your franchise system or even worse your franchisees will fail due to a lack of support. If at all possible, divide your existing staff so that certain of your personnel will be dedicated to your franchise system and others will focus on your company-owned operations. After all, in most cases the revenue generated by the company-owned operations will be needed to support the franchise system in its beginning stages.
  • Solidify Your Supplier Relationships – Negotiation by the franchisor of favorable pricing, delivery and other terms of purchase on behalf of its franchisees is a common benefit of participating in a franchise system and contributes to the success of the franchisees in their own markets. If you will be relying on various suppliers to supply your franchisees with products or services integral to the operation of the franchise system, you should secure these relationships as well as the specific terms of purchase before granting your initial franchise.

The roll-out of a new franchise system is a complex and time intensive undertaking. It can be sidetracked by any numbers of issues. By attending to the matters above as early in the process as you can, you will avoid many of the hold-ups that we commonly see in structuring franchise systems. Stay tuned for a future blog post on the varied hats an emerging franchisor must wear to be successful.