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Entrepreneurs often adopt franchising as an avenue to expand their brands without increasing their on-the-ground workload. This is because expansion through franchising offers the opportunity to grow your brand’s presence while franchisees take on the responsibility of their franchise locations’ daily operations. The path to successful franchising requires careful planning, preparation and strategic decision-making. This article explains the steps you, as a business owner, can take to transition your business model into a franchise concept.
1. Understand the Franchising Model
It is essential to understand the franchising model before franchising your business. In franchising, you, as the franchisor, grant individuals or entities the right to operate under your established business model. These parties become your franchisees.
Franchising offers a unique business model where franchisees invest in and operate their own businesses. You will provide them with training, marketing materials, and ongoing support, ensuring consistency across all franchise locations.
2. Check that Your Business Model is Franchisable
Before formally starting your franchise, you should check that your business model is franchisable. A franchisable business will possess several essential qualities, including the following:
- a proven business model;
- a track record of success; and
- a simple but robust concept that others can replicate in other locations.
If your business fails to meet these criteria, you may need to reconsider your franchising plans. If you still want to franchise, you must revise and retest your business model, making it more scalable and standardised. To do this, you should conduct market research to identify opportunities or pivot your business model. Alternatively, explore other growth strategies, such as licensing or company-owned expansion.
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3. Prepare Your Business for Replication
If you find franchising suitable for your business, you can begin to prepare your franchise concept. Your preparation can include the following:
- writing out your business model’s standardised systems and processes;
- documenting all operational procedures, from day-to-day tasks to customer service protocols;
- investing in branding efforts to create a recognisable and appealing brand identity;
- developing franchisee training programs and resources; and
- conducting market research to identify suitable franchise locations.
4. Invest in Legal Advice
As a prospective franchisor, investing in legal advice is a great idea. Seeking legal advice can ensure you:
- develop robust legal documents;
- protect your interests; and
- effectively navigate potential legal complexities.
A lawyer can help you understand your rights and obligations, mitigate risks and establish a solid foundation for your new venture.
5. Prepare Legal Documentation
To franchise your business, you will need to draft several crucial documents, including the franchise agreement and franchise operations manual. A lawyer can draft these for you. They can also review existing draft documents to ensure they are suitable.
Your franchise agreement is the contract you share with your franchisees. Its contents are critical as it establishes the framework for your relationship. Additionally, it sets out your and the franchisee’s roles and responsibilities.
Your franchise operations manual will be comprehensive and document all aspects of your business model. It will serve as a guide for franchisees, ensuring consistency across all locations. Consistency across each location is crucial in franchising to build your brand’s integrity. Consistency in products, services, and messaging reinforces your brand’s identity. The quality of the documents you prepare at this stage can help you ready your franchise network to offer this consistency to its customers.
This handbook covers all the essential topics you need to know about franchising your business.
6. Consider Intellectual Property Protection
You should consider intellectual property (IP) protection. You must do so even if you have already registered your IP rights to protect your current business’s branding and proprietary systems. A lawyer can also help you protect your brand’s IP rights.
It is a franchising best practice and a requirement of the British Franchise Association (BFA) for franchisors to hold their IP rights. In franchising, branding is critical as it allows you to build your network’s brand identity. Customers will also be able to identify your growing brand in its new locations.
You should also register your new trade marks if you decide to rebrand or launch your franchise under a different name or branding. Before doing so, check that these are unique to your business and do not infringe anybody else’s rights.
Key Takeaways
Preparing a franchise business is a process that requires careful planning. Overall, thorough preparation and strategic decision-making are crucial to successfully transitioning a business into a franchise concept. The process involves:
- understanding the franchising model;
- checking your business is franchisable;
- preparing your business model for replication;
- investing in legal advice;
- preparing legal documentation; and
- considering intellectual property protection.
If you would like legal advice about preparing your business for franchising, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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