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Can Business Owners Franchise Their Online Business?

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Online businesses have become increasingly popular over the past two decades, and the trend is showing no signs of slowing. When people imagine franchising, they often think of big brands with a physical presence, such as Costa and Subway, rather than internet-based businesses. However, online business owners can also franchise their businesses. This article will explain franchising and explore the types of businesses that can work well as franchises. This article will also describe how business owners can franchise their businesses. 

What is Franchising? 

Franchising involves a business owner (the franchisor) granting rights to another (the franchisee) to operate a business using the franchisor’s: 

  • branding; 
  • operating systems; and 
  • products and services in exchange for an initial investment and ongoing royalties.

The franchising approach can allow you to expand your business’ brand. In practice, the franchisee is responsible for the costs associated with opening and operating their new business. On the other hand, the franchisor provides training and ongoing assistance to ensure the franchises operate according to the franchised business’s standards.

Can an Online Business Be Franchised? 

You can franchise an online business. Owning physical premises or actively working within a community is not a prerequisite for growing a business through franchising. Online franchises can offer a unique opportunity for entrepreneurs to operate a home-based franchise. Types of online enterprises that often adopt the franchising model include:

  • remote education services; 
  • digital marketing;
  • eCommerce; and 
  • website development. 
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How Can I Franchise My Online Business? 

There are certain steps you can take to franchise your online business. 

1. Consider Your Business Model

The first step to franchising any business is to check whether your business is franchisable. Firstly, having a replicable business model means franchisees can easily reproduce your business model and start operating. 

Secondly, figuring out whether you have a good history of business success is critical if you are considering brand expansion. Find out if there is a demand for your business elsewhere in new markets. In other words, you should determine whether there is demand in other locations if your online business covers a particular territory. 

2. Prepare Your Franchise Legal Documents

You will need to have several documents in place to franchise your business. There is no particular procedure or package you can implement that will automatically franchise your business. However, one key document is the franchise agreement. The agreement is a legally binding contract between you and the franchisee. 

You can also create a franchise operations manual. Within this document, you will comprehensively detail all of the information a franchisee needs to know about your online business. The manual forms part of the training package, and franchisees can use it as a point of reference before contacting you when they need help. 

It is also best practice to create and supply a disclosure document to prospective franchisees. This document contains essential information franchisees should know before deciding whether to sign the franchise agreement. The franchise disclosure document can include:

  • information about key personnel involved in your online business; 
  • their financial history; 
  • their previous experience; 
  • the business’ history; and
  • information about any legal disputes the business or key personnel are involved in. 

Investing in legal advice at this early stage can prove invaluable for the future of your business. An expert franchising lawyer can help you to draft these documents. It is crucial to have a robust franchise agreement as it ultimately protects you and your brand’s reputation.

3. Find a Franchisee For Your Online Business Franchise

To find franchisees, you will need to advertise the franchise opportunity. Before recruiting, you should consider the ideal person for the role. You should keep this specification in mind when interviewing prospective franchisees. Internet advertising and digital marketing strategies may work best as you will advertise an online business opportunity, so you may also find the ideal candidate online. 

When you find a potential franchisee, you should interview them and check they will be a good fit within your franchise network. If they are a good fit, you can begin the onboarding process. At this point, you can provide them with the: 

  • franchise agreement;
  • disclosure document; and 
  • operations manual. 

All franchisors need to prepare their franchisees for their roles by offering training. Even if your business is based online, you need to provide a comprehensive training package to prepare franchisees for their roles and support them long-term. 

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UK Franchisor Handbook

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Key Takeaways

Franchising can be a suitable method of brand expansion for many types of businesses. Online business owners can franchise their businesses. However, before you franchise your business, you should check that your business model is successful and easily replicable. Ultimately, online franchise opportunities can be attractive to entrepreneurs. They allow franchisees to start a business, often remotely, using a proven business model and pre-established operating systems.

If you require assistance franchising your online business, 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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Sej Lamba

Sej Lamba

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