Business Mentor: Expanding Your Business Through Franchising

Armando Bartolome

Posted at Nov 11 2017 07:30 AM

No entrepreneur would have second thoughts about expanding their business, particularly when they have already established their brand. But growing your business by opening a new store or having your business franchised isn’t without any challenges.

To establish a successful franchise, an entrepreneur needs to make other people interested in becoming franchisees. This hinges on how well the business is currently doing in the market, and if it can be successfully replicated. 

The business needs to have a resilient record of profitability and offer a variety of things to consumers, which are not specific to the business’ current location. 

It is essential to do market research before branching out through franchising. You need to know whether there is a demand for your products/services in various places, and if consumers will welcome the brand in the target location.

It is also essential that you, as a business owner, should know your own capabilities as a potential franchisor. You should realize that when you start expanding your business through franchising, you will no longer be supporting just one store but a number of franchisees. 

Along with this, you will need to give up some of the control on how the business operates. Do not expect that franchisees can follow your exact footsteps. While being in a franchised business needs uniformity, some franchisees may have their own techniques on how to further raise revenues, without doing something that would harm the franchisor agreement. 

As long as they do not give you any problems, you should just learn to take a step back.

Here are a few tips on how you can successfully set up a franchising business.

1. Provide living proof of the success and sustainability of your business. You need to let people know how successful your business is. 

Start with a pilot franchise that would only require a minimal fee. Through this, you will know if the processes and techniques that your business has adapted through the years can work out successfully. 

2. The franchise agreement is the bible of all franchisees and franchisors. This is why everything that is written on the agreement must be fully understood by the franchisees prior to signing. It is best to seek a franchising expert or consultant to check on the document to ensure that it will cover every aspect in the business.

A franchise agreement should contain the following:
•    Grant of Franchise
•    Opening Date, Territory Limitations
•    Fees and Required Purchases
•    Advertising
•    Term and Renewal
•    Support
•    Protection of Proprietary Information and Other Intellectual Property
•    Training
•    Quality Control
•    Damages and Complaint Limitations
•    Obligations Upon Expiration or Termination
•    Franchisor’s Right of First Refusal
•    Relationship between Franchisor and Franchisee
•    Indemnification
•    Non-Competition Covenant
•    Dispute Resolution
•    Insurance

3. In a franchised business, any mistake that one franchise commits may dampen the reputation of the whole business. It is very important that the franchisor ensures that the business name is protected from misuse. 

This is one of the critical issues that a franchisor needs to keep an eye on. Although franchisees pay for their own taxes and all, they will still be trading under the same business name. Customers should receive the same kind of standard and quality of service from all branches of the business. 

All these things should be taken into consideration to ensure that if mistakes happen, these would just be minor issues which can be easily resolved. 

Franchising can help you expand quickly without having to spend a huge amount of money. To help you make your franchising business successful, look for the people who have the same vision as you, know how to execute a plan, and willing to work as part of a team. 

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For questions and comments, you may contact Armando "Butz" Bartolome by email: [email protected] or on Twitter https://twitter.com/philfranguru His website is https://www.gmbmsglobal.com