Franchising Your Business? Things to Keep in Mind


Last month I was interviewed by Paul Segreto on his radio show Franchise Today. During this interview I covered some important topics to consider when franchising a business. This post which I am revisiting expands on the topics I covered during the Franchise Today Interview.

Are you considering franchising your business? If so, start by exploring the questions below. Don’t know where to start?  In this blog you will find many answers so make sure to explore it carefully.  Still lost?  Seek the assistance of experienced consultants, but make sure to check their credentials and talk with their clients before engaging them.

Step 1:  Do Your Homework – Learn about franchising

  • Is my business suitable for franchising?
  • What does franchising offer me that other methods of expansion don’t?
  • Should I consider other growth avenues, or am I restricted to franchising?
  • Am I ready to franchise my business? That is, am I ready to assume the responsibilities of a franchisor?
  • Do I want to grow a brand new business?
  • Am I ready and able to spend the resources needed to franchise my business?
  • What value can I provide to franchisees as a franchisor?
  • Would I be able to add value to franchisees in an ongoing basis? How?
  • What types of problems may I encounter in dealing with my franchisees? Will I be able to respond to them?
  • Will I be able to handle growth? What must I do to be able to do it effectively?

Step 2:  Getting Ready – The Financial Projections

  • Can my franchisees make a decent living? What will their income and expenses be?
  • Is the demand for my products or services going grow in the future?
  • What will happen to franchisees during slow economic times? Would they be able to survive?
  • What conditions must be present for my franchisees to thrive?
  • Will my franchisees make a reasonable return on their investment?
  • How will I be compensated for my efforts and investment as the franchisor?
  • What expenses will I have to grow the franchise network?

Step 3: The Operations Manual, the Training Program and the Franchise Agreement

  • Do I have the systems and procedures in place to make my operations efficient and easy to learn?
  • Are these systems recorded in an easy to follow and simple to understand manner? If not, could they be?
  • Which systems do I have to create?
  • Do I have to automate any portion of my operations? Should I? If so, which one?
  • How do I design a winning training program for franchisees? How many days should it last? What should I teach? Who should teach it?
  • What topics besides those about running the business do I need to cover?
  • Do I need to provide field training? How do I do that?
  • How do I choose the best location for training franchisees? What materials should I provide?
  • What’s included in a franchise agreement? How will it protect me and how will it protect my franchisees?
  • Will my franchise agreement reflect my way of doing business? How much does that really matter?
  • Does my franchise agreement provide for multi units? Should it?
  • What are regional developer agreements? Do I need one?
  • How do I know how much my franchise is worth to a potential franchisee? What about royalties, how much should I charge?
  • How do I determine which territory size I assign to franchisees?
  • Do I need to comply with any state laws?

Step 4: Recruiting Franchisees

  • What should I include in a marketing and franchise recruiting plan?
  • How do I generate interest in my franchise offering? How do I get franchisees?
  • When can I start marketing the franchise?
  • What should I say in my website about offering franchises?
  • Do I need a first response brochure?
  • How do I collect information from franchise prospects?
  • How do I evaluate franchisee prospects?
  • How do I conduct the presentation of my franchise opportunity?
  • What questions should I ask prospects?
  • Are there any questions I should not answer or ask?
  • Are there legal constraints around how I present information to prospects?
  • Should I use brokers to sell my franchise?

Step 5:   Supporting Franchisees

  • How do I help franchisees get started?
  • How much do I need to get involved in site selection? What about facility design and outfitting?
  • Should I be providing financial assistance?
  • Should franchisees buy the equipment and supplies they need from me? What’s the best way to handle these transactions?
  • How much guidance do I need to give franchisees so they can open their locations? What about the marketing their locations?
  • What services can I provide franchisees and how much should I charge for them?
  • Do I include them in my website?

Step 6:   Administrating and Managing the Franchise Business

  • What procedures are needed to communicate and manage the relationship with my future franchisees?
  • What records do I need to maintain?
  • How should I set up franchisee files?
  • How do I manage the initial and ongoing training sessions?
  • How do I train my staff to communicate with and support franchisees?
  • What additional talent do I need to add to my organization and when?
  • Where do I go to find people with franchise experience?
  • Can I use independent contractors instead of full-time staff? Where can I find them?

Step 7:  Franchisor-Franchisee Relations

  • How is the franchise relation different?
  • What do I need to do to ensure I have successful relationships with my franchisees?
  • How do I get my franchisees involved in the decision making process? Do I have to do that?
  • What’s the best method of communicating with franchisees?
  • How often should I communicate with them?
  • Do I need incentive programs?

The list above is comprehensive but by no means complete; there are many other questions that need to be answered during the process of creating a franchise company. Further, your type of business will have some unique issues to resolve. You do not have to have all the answers before you commence the process, no one does. However, you need to have an understanding of the magnitude of this endevor and the types of issues you’ll have to answer.

There is no question that you have a lot to think about when franchising a company, that’s why the process usually takes between 4 to 6 months to complete and that’s just getting you ready to offer your first franchise. The first three years of the life of your new franchise company will be spent improving your offering and finding better answers to the questions.  Just make sure you find a consultant or coach with the required experience and who cares about you and your business to help your through this process.


  1. john - dogs love running! says

    Great info – thanks for all the insight!