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How to Prepare a Company to Franchise

By Ed Teixeira

A number of business owners consider franchising as a possible strategy for growing their company. However, considering a franchise program is one thing and making the decision to actively proceed is another. Before moving to a franchise operation, there are certain steps that should be taken to prepare the company.

Each year numerous business leaders look to a franchise model as a way to grow and add value to their company. Some of these companies become successful franchisors, while others remain mired in mediocrity never to add more than a few franchisees to their network.

Companies that consider franchising as a future strategy need to prepare by taking certain steps. The advantages of this strategy are that even if a franchising program isn’t implemented these actions will still provide benefits to the company. First of all, a company needs to determine if their business can be franchised. This article includes a list of important questions to answer before making a decision to franchise.

If the answers to the questions are positive and the decision is made to eventually franchise then here are the preliminary steps to take:

Write a franchise business plan with timetables, financial projections and operational requirements. Costs for consulting services, legal fees and other expenses can be estimated with accuracy.
Consider a licensing model as an alternative to franchising or to transition into a franchise program at a later date.
Document policies and procedures for operating the business. This will serve as the basis for the franchise operations manual.
Develop an operations manual that can be used as a training manual and will serve as the basis for the future franchise operations manual.
Plan on establishing product/services that can be replicated and integrated into the franchise program.
Implement social media programs such as Facebook and Twitter that can be expanded and assimilated into the franchise program.
Identify staff with particular skills that could be used in the franchise operation. Important positions include training, operations and sales.
Key executives should learn about all facets of franchising including starting up, developing and operating a franchise company. There are ample resources available.
Have a platform for a website that can be built on.
Be cautious about how territories/markets are developed. Consider corporate locations that can be franchised in the event a franchise program is established.
Identify the source of the required capital needed to establish, launch and operate a franchise program

Companies at the preliminary stages of franchising would be well served to prepare the company before jumping in with both feet. Establishing and launching a new franchise is costly and has certain risks. If a company has a business that can be franchised then laying the foundation for the new franchise is the right approach.