Franchise business information and plan

95To complete a registration application with Franchise regulators you will be required to provide a significant amount of information about the proposed business. You are likely to be asked for a complete business plan, perhaps audited financial statements, a detailed operating manual for franchisees, and accounts of the management team’s profile and business experience.

One consolation though. is that you ought to have all this information at your fingertips in any event, to have built your own business case, and probably to show your bank, lenders, funders or investors.

Define your model very carefully. The decisions you make now will be difficult to change once you have set your model up and have franchisees in negotiation with you, or on board.

Decide the terms of your franchise agreement, this will define your business and its profitability for a long time to come, so think carefully and do some modelling of the various royalties and fees, bearing in mind you will want to lock franchises into a ten year contract or longer. Look carefully at competitive franchisors, not just in your own sector, and put yourself in the position of potential franchisees, who will have to take the fee package into account when making their own decisions.

Consider the following;-

  • The structure and level of your franchise fee and royalty rate, management fees, marketing fees.
  • The territory, or size of territory you will award each franchisee
  • Will the franchise be exclusive?
  • How many years will the licence be for? What will the renewal requirement and targets be?
  • Devise a training programme, consider who will deliver it and who will handle support for franchisees. Will you use e-learning as well as face to face training? Do you need to find someone to develop the e-learning programme for you, which will take some time? Although this will involve a significant up front cost, it may save money on training staff further down the line.
  • Decide whether franchisees source equipment and ingredients from your company, from a source you specify. Will you make a mark-up on the supply?
  • Specify the type of franchisees you will seek. Do they need specific skills, or business experience?
  • What will be the total amount of start-up cash franchisees would need?
  • How will you market the franchises?
  • Will you use master franchisees who will develop multiple units in their area, or do you want an owner-operator for each unit who deals directly with you.

Once you have all that in place you will be ready to complete all the legal paperwork and then make applications for registration, which may take several months to come through.

Prepare to launch

Then you will need to hire the staff you planned on earlier to handle training and support. You will need to train and support them before they are ready to meet franchisees. You need to jointly develop training classes, and maybe e-learning modules to support that.

Now you need to begin marketing and selling your franchises. Perhaps you will do that yourself, or use an agency, or hire someone. You may consider a referral system for existing franchisees, with a financial reward if they introduce interested parties to you who go ahead with a franchise.

Then you need to launch the training and support programme. This is a very important milestone, the success of the programme depends on this, and making sure the brand provides a uniform experience to customers. Remember that new employees will have to be trained, and it is important to train each one correctly. One of the easiest ways to lose control of a franchise is by poor training. It is not a good plan to have new staff trained by existing staff rather than dedicated trainers, that is how standards slip and variations from the blueprint creep in.

Now you will need to start marketing the franchise to consumers to drive sales for franchisees. Your franchisees are paying a marketing fee for this so they expect to see results. Again you may need to hire someone to do this on your behalf.

To keep momentum going now you need to be constantly seeking new franchisees, negotiating with them, overseeing training, helping them launch, running your marketing plan. A very different life from running your own original business!