Instead of owning and operating your business, you can offer your business model as a franchise. This will allow others to run the establishments under your brand name. Personal business expansion is expensive and time-consuming. By franchising your company, you can reach new locations without having to spend time managing the new operations. Of course, how your franchisees will operate will need careful planning. The benefit of franchising is surely the gaining of additional revenue avenues. If you own a successful small business that offers products or services to consumers, you may want to consider franchising. It will not only increase your locations and profit, but you will help countless new customers while you also build your brand.

Getting Started

The first step is to learn the specifics of a franchise agreement, franchise disclosure document, and franchise fees. It is important to fully understand the franchise business model. There is lots of time commitment and effort to franchise a business model. Franchise fees can be overwhelming. They must be competitive with other brands in your category. The fees can be a meaningful part of the total cost. The average franchise fee ranges from $25,00 to $50,000 per unit or more.

The following documents are a must before even considering any franchises:

  • Franchise Agreement: A franchise agreement is a contract under which the franchisor grants the franchisee the right to operate a business, or offer, sell, or distribute goods or services identified or associated with the franchisor’s trademark. it exists so you and your franchisees are on the same page. To maintain a brand, all of your franchisees must sign the same agreement. You could add an addendum for territory, credit or other items to allow specifics that can be negotiated.
  • Franchise Disclosure Document: The goal of the FDD is to provide buyers with information that they can use to make a buying decision. Federal law (The FTC Rule) requires that franchisors annually file a Franchise Disclosure Document (FDD) and provide it to every potential franchise buyer. FDD’s provide a tremendous amount of incite on a franchisor’s offering and the health of the organization. It is a lot like reading a public company’s corporate 10k filing and should be reviewed with industry professionals (a franchise attorney and an accountant). As a franchisor you should update this document each year, outlining the requirement of the Federal Trade Commission and any state that has a separate registration. Never start franchising without having all your legal responsibilities in order.
  • Franchise Fees: A franchise fee is a fee or charge that one party, known as the franchisee, pays another party, known as the franchisor, for the right to enter into a franchise agreement. There is usually a one-time franchise fee and then ongoing annual fees. The range for the initial fee is generally $20,000 to $50,000. Ongoing fees are usually based on a percentage of the monthly gross revenue.

Take It One Step At A Time

Before investing in other locations ensure you are not getting ahead of yourself. Write down notes, findings, and areas for improvement to perfect the franchise model process. This results in trial and error but the goal is to streamline the move to start the franchising.

Hire A Franchise consultant

The franchise process should not be done alone. Operating your business is enough responsibility on its own. Between updating your FDD and managing day-to-day operations, you will need guidance. You will need a franchise consultant and a lawyer to help with the legal and operational steps required. Brokers will help your franchise grow with new owners. It takes a team to grow your idea into reality.

Marketing Your Product

Coming up with a solid marketing plan as a franchise owner will be your responsibility. A solid marketing plan will keep you on track as you grow your brand. Without marketing and awareness of your brand, you would not be able to expand through franchising. Keep your business models as simple as possible so it is easier for franchisees to understand. When marketing a new franchise concept, the more a prospective franchise partner has to grasp to understand the whole business model, the harder it will be to recruit good franchise partners.

Train Each New Franchisee

Perfecting your training for new franchisees is critical to overall brand success. Your mission and brand need to be well explained to a prospective franchisee. Training also will help the franchisees feel confident and capable of running their own business with training. Set up your training program before you land your first franchisee.

The Benefits Of Franchising

Franchising can be an effective method to expand your brand on a regional or national basis. Franchisees agree to pay you an initial franchise fee, ongoing royalties, and advertising costs. They also cover their own business start-up expenses. In return, you provide the franchisees with a brand name and goodwill, an operations manual and training, and the benefit of your experience and know-how. When you franchise your business, you are able to expand to areas that would have been too challenging to grow in a company. This growth helps speed your brand to new corners of the country, helping your business reputation.

The Timeframe For Franchising A Business

The franchise purchasing process — from the search to the purchase — will take three to four months. Typically, it will take another two to six months before the franchisee will open their doors to customers. The International Franchise Association website is a great place to start to learn about the franchising process. Franchising your business is a risk since you will not be in complete control of how the franchisee will be operating on a daily basis. That is why you need professionals like the franchise lawyer and broker to make sure you cover all bases before starting the process.


Contact Aaron (608-576-4592) for a Free Consultation!

About Aaron Bakken

Franchise Consultant for The Franchise Consulting Company

Proven Experience
Aaron has 20+ years of franchise and independent business ownership experience. He also spent 5 years as the VP of Franchise Development for an international franchise group, growing the franchise to the advent of a private equity buyout. Whether you are looking to buy a franchise opportunity or franchise your business, Aaron knows how to guide you.

No Cost To You
Aaron is paid by franchisors and development companies for bringing them viable franchise investors. So frankly, his clients have nothing to lose by engaging with him but a bit of their time. Aaron helps his clients navigate the complex world of franchise ownership and development and provides long term guidance to help his clients achieve their entrepreneurship goals.