HOW TO PACK A FRANCHISE YOURSELF
If your business is ready to become a network and reach the federal level, franchising tools can be extremely useful.
Franchising is a special level of business development, when the very model of this business becomes a valuable product for entrepreneurs and desirable for use and copying. Naturally, this level is desirable for companies and they are ready to reach it at any cost.
To do this, you need to develop a franchise, that is, identify all the advantages, technologies, know-how of your business and prepare it for successful copying by other entrepreneurs. This process is commonly called franchise packaging. Personally, I don’t like this term, but it so happens that the franchising market calls the franchise development process that way. That's why we have to obey.
To do this, you need to develop a franchise, that is, identify all the advantages, technologies, know-how of your business and prepare it for successful copying by other entrepreneurs. This process is commonly called franchise packaging. Personally, I don’t like this term, but it so happens that the franchising market calls the franchise development process that way. That's why we have to obey.
Preparing a business
for franchise packaging
Set up all processes
With your franchise, you will be transferring an established business system to your franchisee. To approach creating a franchise, you need your business to already be such an established working system. To do this, it is worth describing all the main processes, policies, checklists and instructions for your business.
Staff the franchising team
To accept new franchisees into your network, you must have a team to support your partners. A very big mistake is to launch a franchise without understanding in advance how and what resources to work with these new partners
Hire a lawyer
In franchising, it is very important to have a lawyer on your team who has experience in working with commercial concession agreements. Franchising relations are such that practically any step and any agreement between the parties requires legal confirmation and consolidation. I do not recommend entering into a franchise packaging project without a qualified lawyer.
Explore your business
General words, but a necessary step. You must identify what exactly is the advantage that you give to your franchisees, what is the value of your franchise. It is these benefits that you will pass on as you go through all the other steps in packaging your franchise.
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Three franchise blocks
The result of packaging your business franchise should be a pipeline for launching new points in your network. A potential franchisee, when submitting an application to open a franchise facility, must receive all the necessary information, sign an agreement, pay a lump sum fee and open a franchise outlet, which in turn must pay for itself within the planned period.
All described actions fit into three main blocks of franchising:
All described actions fit into three main blocks of franchising:
- 1SalesAt this stage, new potential franchisees are attracted, followed by screening out non-target requests and signing contracts with suitable candidates. The result of the franchise sales block is obviously the signing of a commercial concession agreement and the payment of a lump sum fee, which is assumed by this agreement. Once payment is received and the franchise agreement is signed, work with the franchisee is transferred to the next block.
- 2OpeningThe purpose of this block is to open an object, to which the signed agreement gives the right. The franchisee expects to receive from the franchisor assistance in selecting premises, consultations on personnel selection, and design templates that will help to correctly open a point in accordance with all the rules of the brand. At the opening stage, timing is extremely important. The opening itself is not difficult; any organizer can do it. It is important to do this on time so that the franchisee does not overpay for rent and, if possible, is maximally insured for his future activities: so that he does not have to redo repairs, so that he does not have to buy new equipment, so that he does not have to move to another premises. Naturally, these are always risks for the franchisee himself, but your task as the founder of the franchise is to protect your partner as much as possible from such problems.
- 3EscortThe point is open, the red ribbon is cut and now its task is to work, bringing profit to the franchisee and royalties to the franchisor. Assistance in resolving current issues is provided by the support department. Unfortunately, this unit is often involved in extinguishing fires, joining the work at the moment of a fire. The most advanced franchises themselves lead the partner to payback with regular recommendations, monitoring and consulting.
Ideally, the task of the support department is to ensure the fastest return on investment for the franchise outlet. As a director of franchising, this is exactly the goal I set for the support department. The more efficiently this unit does its job, the more royalties the company receives, the faster the franchise pays off.
Franchise packaging steps
And now your business is ready for franchising and you understand how working with a franchise is built within your organization, now it’s time to consider the main steps for packaging a franchise yourself.
Describe the financial model
It is the financial model that you will present to your potential franchisees. It is on the basis of fin. model, the buyer decides whether to buy a specific franchise or not. In my experience, Fin. the model should be simple and understandable. After reading it, the franchisee must understand how much money to invest, what expenses the business will incur on a monthly basis, and how long it will take to expect full payback for the project.
Create a brand book
A brand book is a set of rules for using the corporate identity of your brand. Having a correct brand book, your franchisee should have templates and recommendations for using any element of corporate identity: logo, font, design of advertising materials, and so on. The contents of this document vary depending on the industry and line of business. In our franchise packaging projects, we also recommend including architectural and renovation recommendations, thereby making life as easy as possible for the franchise program partner.
Define a franchise strategy
Determine what goal and by what means your franchise network is going, what positions in the market you want to occupy: do you want to take a leading position, moving the current leader and changing the market, or you will be satisfied with a small affiliate network that is focused on a small increase. Your goals depend on the tools, and most importantly, the budget of your franchise program.
Develop franchise conditions and control points
When preparing your business for franchising, you have already identified your benefits and the value you are passing on to your franchisee. Now it’s time to set the price for the transferred content of your franchise, namely, determine the lump-sum fee, royalties, and other related payments.
This step also involves understanding the control points that are required for your benefits and value to be successfully conveyed.
This step also involves understanding the control points that are required for your benefits and value to be successfully conveyed.
Describe the commercial concession agreement
All franchise conditions and control points must be described in the franchise agreement. The more detailed the agreement is, the more likely it is that you will not have any disputes or contradictions with your franchisee.
I believe that everything that is not described in the contract will be performed poorly, will not be fulfilled, or will cause a conflict. That is why, when working in our consulting projects, we pay great attention to the development of a concession agreement.
I believe that everything that is not described in the contract will be performed poorly, will not be fulfilled, or will cause a conflict. That is why, when working in our consulting projects, we pay great attention to the development of a concession agreement.
An article with a more detailed description of working with a commercial concession agreement
Develop a French book
This document can be called whatever you like: user manual, French book, guideline, guide, it is important to understand that this is a methodological guide to running your business. You have determined what exactly needs to be conveyed, but before monitoring execution, it is important to teach. This book provides complete information on starting and managing a franchisor's business.
Develop a franchise sales system
The franchise is ready to launch, the team is ready to work with new network partners, there is all the detailed information for partners, the last missing element remains - the franchise sales system.
We believe that a successful franchise does not need to be sold; for a successful franchise, you need to select partners who meet the requirements of the network. In order to choose, there must be someone to choose from.
To resolve the issue of network growth by new franchisees, it is important to resolve the question: through what channels will your audience learn about your franchise and how, from the leads that come in, you will understand who exactly is ready to become your franchisee.
We believe that a successful franchise does not need to be sold; for a successful franchise, you need to select partners who meet the requirements of the network. In order to choose, there must be someone to choose from.
To resolve the issue of network growth by new franchisees, it is important to resolve the question: through what channels will your audience learn about your franchise and how, from the leads that come in, you will understand who exactly is ready to become your franchisee.
Like any article on a broad topic, our guide to self-packaging a franchise turned out to be thetic and schematic.
At the same time, it is convenient for me to read such materials, because they can be taken and immediately implemented in work.
A franchise development project is a serious step that requires substantial preparation.
Franchise packaging is one of the few processes that is done according to clear canons, according to a single checklist.
I hope our article helped you plan the development of your own franchise.
And if you have any questions - contact me, I will try to answer.
At the same time, it is convenient for me to read such materials, because they can be taken and immediately implemented in work.
A franchise development project is a serious step that requires substantial preparation.
Franchise packaging is one of the few processes that is done according to clear canons, according to a single checklist.
I hope our article helped you plan the development of your own franchise.
And if you have any questions - contact me, I will try to answer.
If you have any questions about this topic, or have something to add, leave comments below.