Business Finance – Considering Franchising your business?
Franchising your small business is a good way to achieve fast growth. It may set you on the path to becoming the next McDonald’s or Subway. Whether or not taking such a plunge will work for you is a decision best determined by your own intimate knowledge of your business. You must be able to determine if your business is franchise worthy. Any magnitude of growth as a franchise will require substantial funding, and detailed planning (from acquiring and using a pin to an anchor). Here are a few best practices you ought to follow.
Develop a Business Plan
Develop a business plan outlining the financial details as well as the long-term objectives for the growth and future development of your franchise. Your plan must indicate what you want to achieve, and the measures you will employ to meet that goal.
Key Point: Ensure that the information in your business plan, operations manual, and the market analysis are clear and easily understood. This is what your prospective investors will use to weigh your company. Emulate this clarity in all your business materials.
Develop Your Own Operations Manual
Your franchise operators will need clear guidance on how you want your brand to function. Without this instruction, each chain will more than likely form their own mode of operation which would inevitably take away from your unique brand. Develop a guide bearing detailed instructions for your franchisee to follow. The best way to provide this instruction is to create an operations manual in accordance with your business model. This manual can be made accessible to your franchisee via a private Internet site that is password-protected.
Your operations manual should not be static. It will reflect the knowledge and experience that was gained by you and staff during the years of your operations. New experiences are gleaned each day, and your manual should reflect this through regular updating.
Outline Your Finances
This outline should include cost related to the:
1. Design and development of your operations manual.
2. Research.
3. Recruitment.
4. Support structure.
5. Legal fees.
6. Pilot operation/s.
Test Your Franchise Dream
Before you enter the franchise arena at full force, ensure that you do a pilot test. Set up a pilot site or outlet, and allow it to run for some time before making your final decision. Consider giving it six to twelve months if it is a seasonal business.
Keep a Pilot Going
The marketplace can be volatile at times, and should be monitored on a constant basis. Keep an in-house pilot program going that will allow you to test the marketplace and see how changes affect your business. This pilot will allow you to measure how changes impact your business, and you can also use it to test new ideas and assess the results.
Your Business/Franchisee Legal Contract
Use a specialist franchise lawyer to prepare a legal contract that covers the rights retained by you as the main franchise holder, and that which is given to the franchisee. The contract should cover all other legal terms of agreement between both parties.
These few pointers are key elements that must be observed by those who will be franchising their business. Other important elements include your search for, as well as the selection and training of the ideal franchisee. You will also need to pay particular attention to using the right personnel for legal and financial advise and service.
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