How to Franchise Your Business
Mark C. Siebert, CEO
The iFranchise Group

Many entrepreneurs find that franchising is an ideal way to expand their businesses. Because your franchisees are responsible for the investment of each operating unit, the franchisee bears the cost of expansion. And franchisees are highly-motivated because they have invested their own capital in the franchise business.

So are you ready to franchise your business? Here are a few tips:

• Be sure your business is “franchisable.” Before you start to franchise, be sure that your business is, in fact, franchisable. First, your business first needs to be salable as a franchise. Ask yourself: Have I received legitimate inquiries? Is the business model unique? Do I have a point of difference? The business must also be replicable. That means it cannot rely too highly on your personal involvement. Finally, and most important, it needs to offer a potential financial return that will allow a franchisee to generate an adequate return even after paying the franchisor a royalty. If you are not comfortable in addressing these questions, speak to a franchise consultant about whether your business has what it takes.

• Develop a strategy. Franchise success, like success in any business, does not happen by accident. Your goals and your resources will dictate the strategy you should employ and the structure of the franchise offering. Key questions to address will include how to position the opportunity versus franchise competitors, type of franchises offered (start-up, area development, etc.), services provided to franchisees, staffing to provide those services, fees, royalties, and other revenue sources. If these decisions are made without adequate forethought, the franchise may be doomed from the beginning.

• Take control. Large scale franchise success is all about delivering a consistent consumer experience. In order to do that, you need to be sure that your systems are in place. That generally means comprehensive operations manuals, training programs, and perhaps even training videos. But be careful. The contents of these materials can help shield you from liability – or, if poorly crafted, can create liability.

• Get Legal. In order to franchise, you need to develop the appropriate legal documents. In the United States , you will need to develop your franchise agreement and Uniform Franchise Offering Circular, and, depending on where you will be selling franchises, you may need to register your franchise offering with state agencies. Don’t take shortcuts here. Hire an attorney who specializes exclusively in franchising.

• Sell it. In order to be a franchisor, you must, of course, sell franchises. And franchise sales starts with lead generation. At a minimum, a new franchisor should budget between $5,000 and $7,000 per franchise sale on media alone. You will also need first class marketing materials such as brochures, videos, website, etc. to support your franchise sales efforts. While selling franchises certainly involves a sales effort, one of the most important rules in franchising is to be selective in the franchise sales process. If you are not confident that a prospect will succeed, take a pass.

• Make them succeed. In franchising, nothing succeeds like success. If your franchisees are wildly successful, you will find that your franchises practically sell themselves. But if your franchisees fail, no amount of marketing and sales effort will rescue your system. So be sure that you do everything in your power to make your franchisees successful.

Mark Siebert is the CEO of the iFranchise Group, a Homewood, IL based franchise consulting firm.

This article originally appeared in Entrepreneur magazine.