How to Create a Franchise
Franchise companies can provide thousands to millions of dollars in profit when started and run correctly. Most people with successful businesses don't consider turning them into franchises because they don't know how. Fortunately, turning a business into a franchise doesn't need to be difficult.
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Instructions
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Preparation
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1
Conduct market research. Find out what your competitors have been doing that has worked and not worked. You can do this by going to different companies as a customer, or you can look at the competition in terms of profit during particular promotions or sales/operation methods.
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2
Create a business model that sets your franchise apart in the industry. You will use the data collected during your market research to do this---look at what has worked and then put a new spin on providing a successful product or service. A successful franchise typically is successful because, even though it may offer something similar to another business, it does it in a way that sets the business apart.
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3
Locate funding sources for the franchise. Sometimes you can finance a franchise through a business loan, while other times you can obtain grants from the government or from individuals/entrepreneurs who support your industry. You should plan on finding between $500,000 and $1,000,000 in capital.
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4
Prepare a business plan. Your business plan will detail what separates you from competition, providing tan estimate of revenue potential and how you intend the franchise to run. You can send copies of the plan to the funding sources you found in Step 3.
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5
Prepare a standard disclosure document (required by the Federal Trade Commission) and register (if necessary) with the state.
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6
Have statements (an audit) provided for the company you intend to franchise by an accountant. This will give franchisees a more official idea of what the company is worth.
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7
Document all the systems you need to run the franchise and develop a training system complete with a written manual.
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8
Invest in marketing, and find franchisees who are willing to purchase your business.
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Tips & Warnings
Have a lawyer review all the documents associated with the franchise to make sure you are in compliance with all regulations. Have a professional copywriter and marketer help you with the development of your training materials and business copy--you will attract more franchisees if your presentation for the franchise looks professional and is free of grammar/punctuation errors.
