It's All in the Timing

First Steps

So how do you decide when your company is ready to franchise? A small business should operate for at least five years before even considering the prospect of franchising. This way it can establish that it has a viable concept, ongoing market demand, replicable systems, and a logistic, management, marketing and training structure capable of supporting franchisees in a variety of locations.

During that five-year period, or however long your business chooses to take before trying to become a franchiser, your business will not be standing still. You should open and operate additional outlets to determine whether your business is a viable franchise.

You must ask yourself what sort of return your franchisees are likely to get for their investment, as the less attractive the returns, the more difficult it will become to attract the brightest, or indeed any, franchisees. Owning and operating additional outlets prior to franchising will provide you with the information on how well outlets perform, which you can then demonstrate to potential franchisees.

In order to operate as a franchiser, the company concerned must have the right people in place to provide support, training and management to franchisees. Potential franchisers must have such experienced personnel in place before becoming a franchiser, either by providing additional training to current staff, recruiting from outside the company or a combination of both.

The staff of the franchising company will act as consultants to its franchisees and must possess skills such as leadership, planning, team building, decision making, problem solving and delegating.

Any business that is considering becoming a franchiser should own and operate at least one pilot outlet to test its viability. This gives the potential franchiser the opportunity to test and refine the concept of the business to be franchised.

Operational systems and controls, decor, designs, layouts, equipment, training methods, advertising and marketing programs, products and services, job requirements and descriptions and financial models should all be examined at this stage.

By doing so, problems can be identified early, enabling the company to develop solutions before embarking on a full-scale franchising venture. It ought to provide the business with a clear indication as to its suitability to becoming franchised.

The business that you are looking to replicate must also be a success as a standalone outlet, as well as being distinctive and easily replicable.

Get professional advice from a number of quarters - solicitor, banker, accountant, franchise consultant - and have your franchise agreement written by a solicitor experienced in the area.

Also take time to write an operations manual, have first-class training, choose your franchisees very carefully and maintain good ongoing relationships with them, focusing on their satisfaction and profitability, as this will impact on your own.