A beginner’s guide to franchising your business
Growing your business to the extent that you are considering franchising is a huge benchmark for success. Taking the path toward franchising your business can be arduous without proper preparation, but knowing what to do and how to do it can get you from point A to point B efficiently and effectively.
Are you really ready to franchise?
The absolute first step on your journey to franchising is ensuring beyond any doubt that your business is in a position to become a franchise. Entrepreneur contributor Carol Tice recommends a multi-front approach, which includes market research to ensure that there’s a greater audience for what you’re offering. This will help you pick the best locations for franchises and determine what role you’ll play in the startup process.
You’ll also want to make sure that you are not just financially stable, but profitable. If you don’t have the capital and cash flow to support franchising, you may want to wait. Borrowing or seeking investors is one way to expand, but you’ll want to weigh whether it’s the right choice for your business at the current stage.
LegalZoom’s staff writers also point out that you have to be comfortable with yourself to a certain point. When you franchise your business, it will fall to you to train your franchisees so that they deliver the same standard of excellence with your products and services. If you plan to build a franchise, you’ll need to be confident in your capacity to lead.
Filing with the FTC
In addition to the upfront costs of turning your business into a franchise, you’ll need to contend with different filings and paperwork. One of the most critical, Tice notes, is a Franchise Disclosure Document, which you’ll need to file with the Federal Trade Commission.
An FDD is a bit like a business plan that you prepare for the FTC. LegalZoom’s staff writes that this document includes 23 sections covering factors like key members of the franchise, finances, and issues relating to trademarks and copyrights. Your FDD must be updated at least once a year and as needed to account for changes to the makeup of your franchise. And as a condition of franchising, you must provide all franchisees with a copy of the FDD at least two weeks before signing a franchise agreement.
Franchise agreements are the other major document that you’ll have to have as you move forward with expanding. This is the binding contract by which your franchisees are bound and it stipulates everything from specifications to sales requirements to legalities like noncompete clauses.
Also critical for franchising is your operations manual, which lays out how the business should be run. The LegalZoom staff notes that your operations manual can evolve as you develop new standard operating procedures, and that you can better supplement its evolution by making it digital and implementing video and other media.
If you’re thinking about franchising and aren’t sure where to start, you can seek the help of a professional franchise consultant. These experts will work with you to determine your readiness and obligations as you ramp up toward getting the ball rolling and point you in the right direction at the forks in the road along the way.
The information in this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.
Source: IMakeNews, Inc.
