How To Become A Franchisor?

The process of a business owner becoming a franchisor is not a simple route. Franchise Development of a business involves branding your company, a franchising model, a marketing plan, a franchisee training program and your franchise's operation and supply chain. You need to take many steps in the franchise development process before franchising your business. Below are some basic guidelines for you to take note of on your way to becoming a franchisor.

Related: Advantages And Disadvantages Of Franchising

Step 1: Research Your Local Law

Franchising regulations vary from country to country, sometimes even state to state. Therefore, it is essential to research your local Franchise Law to understand your basic qualifications and roles in becoming a franchisor.

Step 2: Trademark Your Brand

To protect other businesses from copying your brand, you should trademark your company trade name and logo, at the very least. Doing this allows exclusivity for your brand and products. Who wants to invest in a business where everyone is selling a product that is highly similar to yours?

Step 3: Establish A Franchise Model for Your Business

Unless you have in-depth franchising knowledge or experience, it is recommended to engage a franchise consultant to advise on your franchise model. The primary thought is that if instead, you engage a general business consultancy firm, they may not be proficiently equipped to highlight the necessary points to make your franchise model work. Key deliverables from such franchise consultancy services should include a Franchise Business Plan and Franchise Manual. The Franchise Business Plan should cover your goals, objectives, and financial Pro-forma for franchising. At the same time, the Franchise Manual will be a detailed document explaining step-by-step operating procedures via operations manual specific to your business. Alternatively, you can also check with your local franchise authorities whether there are any available franchise seminars you can attend to gain further insights.

Related: Franchising Your Business Without A Franchise Consultant

Step 4: Determine Your Level of Support to Franchisees

One of the biggest draws for potential Franchisees to the franchise's concept would be the level of support the franchisor provides. After all, if there is barely any support provided, wouldn’t it be almost the same as setting up your own business? Critical support areas should include operations and human resource management, both of which are integral to any business. Training procedures and schedules will also have to be carefully planned to facilitate optimal knowledge transfer to attain efficiency and effectiveness. Alternatively, you can check with your local franchise authorities to see if they can help.

Step 5: Identify Your Personnel Involved in The Franchise Support

The next step would be to identify the person providing the necessary support to your franchisee and their franchise unit. Arrangements must be made for their absence while they are on training duties so as not to disrupt your operations. You may need to consider expanding your payroll budget to accommodate more staff to facilitate this franchise system.

Step 6: Create Your Franchise Agreement

Creating a thorough Franchise Agreement is very important as this will specify the requirements, responsibilities and limitations for both the franchisor and franchisee. More importantly, it may protect you as a franchisor in the event of disputes with your franchisee. This is where your Franchise Consultant (if engaged in the first step) will come in handy. The Franchise Consultant should work closely with your Legal Advisor to draft the Franchise Agreement to ensure all potential loopholes are covered. Of course, engaging a Legal Advisor with extensive experience in drafting Franchise Agreements would be an advantage.

Step 7: Market Your Franchise

Having your Franchise Business Plan, Franchise and Operations Manual merely prepares you for franchising, but you are not yet a franchisor. What makes you a franchisor is your ability to attract business investors or franchisees successfully. To do so, you must tell the news that your brand is available for franchising. There are many ways to market a franchise. The most common method is to participate in franchise events or fairs. Such activities attract prospective investors, and you will have the opportunity to showcase your franchise brand to them and increase awareness from a franchise sales perspective.

Another alternative to sell franchises is to search for websites that offer a franchise listing function to have an online presence. In today’s digital era, starting a search on the internet is usually the first avenue people adopt when looking for information, and you should take advantage of this. Additionally, not having an online presence may portray an outdated image, causing less appeal to prospects. However, note that such franchise listing websites must have credibility, and it is up to you to conduct due diligence before engagement. A good gauge will be to see if the website has credible partners, such as government agencies or established firms, to ensure healthy online traffic.

The last method you may want to look at is engaging a Franchise Marketing firm. Doing so can save time and effort as all the work will be carried out by the company instead. As a result, you can focus solely on the operations side of your franchise business. Remember, your role as a franchisor is to assist in setting up a franchised unit. 

Step 8: Signing the Franchise Agreement

To officially become a franchisor, the last step would be to sign a Franchise Agreement with your qualified franchisees. Unfortunately, most people don’t understand that the Franchise Agreement is a customised legal document rather than a standard form of contract. Therefore, extensive discussions should be conducted to understand both parties’ needs and considerations fully.