How to Franchise Your Business in 6 Steps

Franchising presents an exciting opportunity for you to expand your brand and tap into new markets without relying solely on your own contributions.

But franchising your operation requires considerable planning and standardisation to be successful.

In this guide, we’ll explore the intricacies of franchising and prepare you for the jump by answering questions like:

• What is a franchise and how does the model work?
• What are the benefits of franchising a business?
• How to franchise a business in the UK?

Let’s get started.

How does the franchise model work?

Franchising is a business model that allows you (the franchisor) to grant franchisees the rights to operate a duplicate of your business under a licensing agreement.

Typically, franchisees will express interest in owning and running a new location. You then assess their suitability based on their experience, skills, available capital and other factors that you deem important.

If you approve the franchisee, they’ll sign a franchise offering that stipulates the terms and obligations associated with running your franchise. These can include factors such as brand compliance and maintaining performance above particular benchmarks.

The franchisee will usually pay ongoing fees or royalties as part of the licensing agreement. But in return, you provide the franchisee with support, branding, systems, and a proven business model.

What are the benefits of franchising a business?

Franchising offers numerous benefits for entrepreneurs looking to grow their company.

Some key advantages include:

• Rapid growth potential: Franchising allows you to rapidly expand your business by leveraging the resources and efforts of motivated franchisees. This can result in a broader geographical reach and increased market share as you don’t have to manage each location by yourself.
• Capital infusion: Franchisees typically invest their own capital into opening and operating franchised units. So not only is it up to them to figure out how to finance a franchise business, but it also provides you with additional funding to further develop your brand.
• Brand expansion: Franchising helps you rapidly build brand awareness and recognition in new markets. As franchisees open and operate units, they contribute to the brand's visibility and reputation which spurs further growth.
• Operational consistency: The idea of franchising is that franchisees follow a standardised operating system and adhere to established processes to ensure consistency across all locations. This makes it easy to assess the performance of franchisees while improving their chances of success.
• Shared risk: Franchisees take on most of the financial risk associated with opening and operating their individual units. This reduces your potential downside while enabling you to reap the rewards of business growth.

How to franchise your business in 6 steps

Like future franchisees who’ll have a proven blueprint to follow when running individual locations, there are steps to follow when franchising your business.

1. Assess franchisability

Before proceeding you must evaluate whether your business is suitable for franchising. Consider factors such as scalability, profitability, uniqueness and the replicability of your business model.

If a business is complex or relies on dynamic services, such as a marketing agency, it may be too difficult to craft repeatable business systems.

The goal here is to figure out whether anyone (with some training) can successfully run a franchise location.

2. Formulate a franchise business strategy

As the franchisor, you need a clear plan for growing your brand. Factors you need to develop include:

• Overall business goals.
• Target markets and your ideal customer profiles.
• Marketing and sales strategies for individual locations and how you’ll promote franchise opportunities.
• Growth projections.
• The ideal franchise structure.
• Franchisee assessment criteria and a franchise agreement that they need to follow when owning a franchise.
• Standard operating procedures, systems and key performance indicators (KPIs).

If you want to learn more about franchise business strategy, the British Franchise Association is an excellent resource.

3. Seek guidance from a franchise consultant

Before you set everything in motion, it’s wise to visit a franchise consultant so you can learn how to start a franchise business.

Not only will they guide you through the intricacies of franchising, such as legal requirements and documentation, but they also provide valuable insights into the process.

Ensure you’ve gone through the preliminary steps before going to the consultant so they can help you in areas where you’re stuck.

4. Establish a franchise fee structure

Setting the franchise fee structure is vital to successful franchising. If it’s too high, you can deter potential franchisees. But if it’s too low, you don’t get fair compensation for the value you provide.

Consider factors such as:

• Industry benchmarks for other UK franchises.
• The support you provide franchisees and the costs involved.
• The popularity of your brand.
• The potential return on investment (from both your perspective and your franchisees’).

5. Develop a comprehensive training program

Developing a robust training program ensures that franchisees have the necessary knowledge and skills to operate a location successfully.

Not only does this help the franchisee, but it also ensures your brand can maintain its reputation in the marketplace.

Your franchisee training program should address:

• The specific tasks, processes and operational requirements of your business model.
• Common challenges that franchisees may face.
• Different knowledge branches, ie. product, customer service, marketing, etc.

It’s also a good idea to vary your modes of instruction between classroom and field sessions so franchisees can get real-world experience.

6. Promote your franchise for sale

Marketing your franchise opportunity is crucial for attracting qualified franchisees.

And just like building your initial brand, you need to identify your target audience, understand how to speak to them and know where to find them.

When you figure that out, common marketing channels include:

• Content marketing through a website.
• Posting on social media.
• Pay-per-click marketing on Google and social networks.
• Referral programs.
• Expos and trade shows.

You can also advertise your franchise with us. Listing your franchise on our modern franchise marketplace gives you access to our proactive marketing, targeted reach and serious franchise and business buyers.

Now it’s your turn to act. Follow the six steps outlined in this guide and pave the way for a successful franchising business.

Good luck!