If you’ve achieved small success, good for you! As you think about the best way to grow, you may find yourself thinking, “I wish I could clone myself!” That technology is a long way off, so perhaps a better option would be to consider cloning your business model through franchising opportunities. A franchise is one of the best ways to grow your business quickly.
What is a Franchise?
When you franchise your business, you give someone else the opportunity to open another location of your business and you provide them with the tools to be successful. In return, they pay you a fee and ongoing royalties.
Types of Franchises
There are two ways to franchise your business, according to the U.S. Small Business Administration Product/Name Franchising: In which the franchisor owns the rights to the business name and sells the right to use the name, usually within a certain geographic area, to the franchisee.
What is Business Format Franchising?
Business format franchising, in which the franchisor provides a full range of services to the franchisee, from assistance with locating a site for the business, to assistance with financing, to marketing plans, training and product supply. With business format franchising, the franchisor has more control over what each location looks like and how it operates.
Tips for franchising your business model
1. Get help from a franchise consultant. Just like your franchisees will look to you because you have experience running the business, there are people you can look to who have experience franchising other businesses. A franchise consultant can help you with the legal and regulatory details and help you find prospective franchisees.
2. Choose your franchisees carefully. Make sure you sell your franchises to people who share your work ethic, and make sure that the franchise agreement is structured so that both you and the franchisee can do well if the business succeeds.
3. Start Small. Remember you don’t have to swallow the whole elephant. Many people think of McDonald’s or Subway when they think of franchises, but even they didn’t go from one location to 3500 over night. It’s okay to start small, with one or two franchised locations.
4. Be specific. Be very specific. Successful format franchises are exactly the same in every detail, from the exterior signage to the brand of toilet paper used in the restrooms. Each of these details must be explained to franchisees.
5. Protect your franchise with insurance. As a franchisor, you want to be sure that your franchisees are protected from risks that could be financially devastating. You can do this by requiring that franchises carry liability insurance and professional liability insurance and any coverage that may be specific to your business.
A franchise has the potential to be a huge win-win for both parties. The large franchise organizations like McDonald’s, Subway, Dunkin’ Donuts and Hertz know the value of this relationship. With some preparation and assistance, your business can benefit too.