Ever think of franchising your small business? You have seen the big franchises – Wendy’s, Subway, McDonald’s and others, but what about your business? The Small Business Administration (SBA) recommends that if you have a successful brick and mortar business (for instance, a restaurant, retail outlet, tax or legal services or other industries that can be easily replicated), franchising out your business could increase both customers and revenues – and if the first franchise is successful – the second and third can thrive as well. However, franchising is not easy or nor is it cheap as it takes a considerable amount of capital and legal fees to create replicas of your business.
Here are five tips for franchising your small business.
- Make sure it is a business that is easy to replicate. A good franchise is one that is easy to replicate. For example, if you have a “build your pizza” type of business, make sure that the franchise location has the same look, ingredients, taste and feel as the original.
- Make sure you have the capital. The SBA advises: “If you’re sure your business will generate enough revenue as a franchise, next consider the fact that the initial start-up process will require a significant amount of cash.” This can include attorney fees, franchise registrations, taxes, not to mention any renovations to the physical space to turn it into a nice looking business that represents your original. Just the construction and design alone can be a significant investment. Companies like Imperial Advance offer business term loans, merchant cash advances, revenue based financing and lines of credit for a small business looking to expand.
- Get legal help. If you do decide to franchise your business, there are many legal issues you must address. If you are not sure you want to do that yourself – find a lawyer who specializes in franchise law in the area(s) you are looking to build out.
- Create a detailed manual. Make sure the employees in your franchises have a manual to help them abide by the same rules, regulations and code of conduct as in the original business. In addition to developing a manual, train your franchise employees to ensure they offer the same level of customer service as the original business. By doing in-person training, you can help ensure that everyone is aware of the rules, vision and strategies for the business.
- State laws. Even if you have legal advice or help, learn the state laws for franchising (every state franchise law differs so if you go out of state, you’ll need to understand their regulations as well). “Once you’ve begun franchising, some states remain active in the relationship between you and your franchisees by monitoring territorial rights or limiting the transfer and renewal of your franchises,” according to the SBA.