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How to Prepare a Company to Franchise

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A number of business owners consider franchising as a possible strategy for growing their company. However, considering a franchise program is one thing and making the decision to actively proceed is another. Before moving to a franchise operation, there are certain steps that should be taken to prepare the company.

Each year numerous business leaders look to a franchise model as a way to grow and add value to their company. Some of these companies become successful franchisors, while others remain mired in mediocrity never to add more than a few franchisees to their network.

Companies that consider franchising as a future strategy need to prepare by taking certain steps. The advantages of this strategy are that even if a franchising program isnít implemented these actions will still provide benefits to the company. First of all, a company needs to determine if their business can be franchised. This article includes a list of important questions to answer before making a decision to franchise.

If the answers to the questions are positive and the decision is made to eventually franchise then here are the preliminary steps to take:

  • Write a franchise business plan with timetables, financial projections and operational requirements. Costs for consulting services, legal fees and other expenses can be estimated with accuracy.
  • Consider a licensing model as an alternative to franchising or to transition into a franchise program at a later date.
  • Document policies and procedures for operating the business. This will serve as the basis for the franchise operations manual.
  • Develop an operations manual that can be used as a training manual and will serve as the basis for the future franchise operations manual.
  • Plan on establishing product/services that can be replicated and integrated into the franchise program.
  • Implement social media programs such as Facebook and Twitter that can be expanded and assimilated into the franchise program.
  • Identify staff with particular skills that could be used in the franchise operation. Important positions include training, operations and sales.
  • Key executives should learn about all facets of franchising including starting up, developing and operating a franchise company. There are ample resources available.
  • Have a platform for a website that can be built on.
  • Be cautious about how territories/markets are developed. Consider corporate locations that can be franchised in the event a franchise program is established.
  • Identify the source of the required capital needed to establish, launch and operate a franchise program

Companies at the preliminary stages of franchising would be well served to prepare the company before jumping in with both feet. Establishing and launching a new franchise is costly and has certain risks. If a company has a business that can be franchised then laying the foundation for the new franchise is the right approach.

© 2011 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com

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