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How to franchise your business

Once you've grown a successful business, you might be wondering how you can expand. One proven way to grow profitably is through franchising. In this post, we answer the frequently asked questions about how to franchise a business.

How a franchise works

If you’re looking to franchise your business, you’ll first want to understand how a franchise works. That way, you can be sure it’s the right strategy for you.

When you’ve grown your trade business to a decent size, there are several options to consider. Franchising is just one.

In a nutshell, you (the franchisor) grant permission to a franchisee to use your established brand. They use the same working methods, marketing, workwear and vehicle wraps, working within your parameters to run their own branch.

You’re essentially allowing a franchisee to own and operate a tried and proven business for a pre-determined period.

The details of the relationship between the franchisor and franchisee are outlined in a contract called the Franchise Agreement. This will iron out the intricacies of the arrangement, including:

  • The duration of the franchise and any renewal rights
  • The franchisee’s obligations for performance, paying fees, marketing, reporting etc.
  • The initial training
  • The start-up package, including an outline of costs
  • The operations manual
  • The ongoing support available, e.g. marketing and training
  • The trademark licence
  • Quality and standards
  • Exclusivity
  • Restrictions
  • Terms & conditions

Get more leads for your franchise network

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How do franchises make money?

Wondering how franchises make money? As a proven business model, it could work for your existing regional or national setup.

The franchisee must pay the franchisor a franchise fee, start-up fee, and ongoing royalty payments. These are typically a percentage of gross sales. They’re basically paying for:

  • Your support
  • Use of your tried-and-tested business model
  • Access to your job leads
  • To benefit from the reputation you’ve built for your brand

However, even though you’ve worked hard to grow a profitable business prime for franchising, franchisors will typically continue to plough efforts into the overall brand.

Support of franchisees will also help ensure success for the whole organisation.

how to franchise your business

How to franchise your business in 7 steps

Franchising an existing business marks an exciting time in your entrepreneurial career. But how do you actually franchise your business?

If you’re wondering how to sell a franchise, you’ll find everything you need in the section below.

Get more leads for your franchise network

Expand your business even further with our Enterprise solution

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How to sell a franchise

Before you sell your franchise, you’ll need to find someone who wants to buy your franchise. To do this, you’ll need to conduct a business evaluation.

1. First, evaluate whether your business is ‘franchisable’

You’ll need to ask yourself a number of questions about your existing setup.

  • Is your business credible?
  • Do you have a clearly defined and recognisable brand?
  • Do you have proven methods of trading that can be replicated?
  • Could you teach your business to others?
  • Does your business have something unique about it?
  • Do you have a profitable business model?
  • Do you have the financial capability to franchise your business?
  • Do any parts of your business model need to be adapted to make your business franchiseable?

The British Franchise Association (BFA) is a useful resource for business owners looking to franchise their business model.

2. Next, outline a strategy to achieve your goals

What goals do you want to achieve through franchising, and how will you make that happen?

  • Do you want to grow nationally or internationally?
  • How many franchises would you like?
  • How will your franchise model work?
  • What will be your operating standards?

3. Contact a specialist franchise solicitor

It’s crucial you speak with a specialist to help navigate the complexities of the franchise system. After all, you’ve reached this stage because you’ve worked hard to create your own business.

A specialist franchise solicitor will help to protect your existing business setup. No matter what its size. You need to reduce the impact of any risks.

Such a solicitor can put together the franchise contract for you, which will offer huge peace of mind for such an important transaction.

Get more leads for your franchise network

Expand your business even further with our Enterprise solution

Learn more

4. Crunch the numbers

When you franchise your business, you normally charge an initial start-up fee, plus ongoing royalty fees.

You have two choices when it comes to the royalty fees:

  • You charge a set amount each month, with your franchisee paying you the same amount regardless of profits
  • You charge a percentage of their monthly profits (the BFA averages this to be around 12% of the franchisee’s sales)

5. Source suitable franchisees

Just as you would recruit employees, you need to have a structured recruitment process in place for potential franchisees too.

  • You want the right type of person to represent your brand, so take your time to get the right fit for your business
  • You will need to relinquish some control as your business expands, so trust will be an important factor
  • You can teach the ‘hard skills’ in your training program, but you can’t teach a great work ethic or personality!

Ideally, your franchisee will bring something new and fresh to the business that can help to take it to the next level.

Before disclosing information relating to your business, it’s wise to ask your potential franchisee to sign a confidentiality agreement.

6. Provide training

In order to consider a potential franchisee, the chances are you’ll need them to have a certain level of skill and knowledge.

However, if they only have basic skills, you could insist they attend a training course in your given trade, such as those provided by Logic4Training. Don’t forget that Checkatrade members can save around 10% on costs, which you could offset as part of onboarding.

To help make sure your franchisee is successful, don’t scrimp on the training. Take time to prepare, deliver, and maintain your franchise training.

As part of the Franchise Agreement, you will have outlined the training you’ll provide and the operations manual for the business.

7. Marketing

Having built a successful business, you’re probably no stranger to the various marketing methods available, and how they can help to grow your brand.

Once your franchise is agreed, it’s important to get the marketing wheels in motion again. This will not only help to generate business for the new franchise, but it’ll also build greater brand awareness overall. And perhaps attract even more franchisees too!

After an initial marketing push, it’s quite typical to set a marketing fee for the long-term, which should be outlined in the Franchise Agreement.

Entering a franchise agreement is a big step for both parties. You may find it useful to anticipate the kind of questions a potential franchisee might be considering at this stage.

Grow your franchise with Checkatrade

At Checkatrade, we have helped hundreds of businesses grow their franchises and larger trade businesses.

From growing medium to larger organisations to helping people set up franchise networks, we can support with our skills and expertise to ensure that your franchise is a complete success.

As a larger trade business, by using our Enterprise model, your franchise is far more likely to thrive.

Some benefits, we can offer you include:

  • Dedicated Enterprise support team
  • More high quality leads
  • CRM integrations
  • Targeted marketing in your local area
  • Proven business growth models

To grow your business and create a profitable franchise model, use the Checkatrade Enterprise model today.

Get more leads for your franchise network

Expand your business even further with our Enterprise solution

Learn more

How to franchise your small business

With a profitable small business, it’s only natural to wonder how to take this to the next level. After all, there may only be one of you, so how can you scale up? It is possible to franchise your small business. Here’s how.

How to turn your business into a franchise

There are a number of steps to follow when you want to turn your business into a franchise. However, these are three of the key ones.

1. Create an operations manual

You know your business inside out, but could someone else step into your shoes and run the business just as you do?

Start documenting every aspect of your business to help provide a framework that will ensure consistency.

2. Protect your brand

It doesn’t cost a lot to trademark your brand, but it’s invaluable as a tool. Getting trademarked will stop businesses from copying your brand as you become more visible.

3. Test the waters

Will your business be successful as a franchise or not? Take it on a test run to find out if your operating manual is up to scratch.

  • You should measure results
  • Figure out what training is required
  • Identify any pitfalls before you move into the world of franchise agreements.

Run the test as a pilot operation and work with a franchisee who’s willing to navigate this learning curve with you (normally for preferential terms).

Carry out an assessment

Once you’ve completed these three initial steps, there’s nothing stopping you from going further. After working out how you’ll success, you can start taking the seven steps to franchise your business, as outlined in this post.

Ultimately, it’s crucial not to rush this process. With this guidance, specialist advice from the BFA, and sound legal counsel, there’s no reason why you can’t create a successful franchise.

FAQs

How do I make my business a franchise?

To make your business a franchise, you must first make sure your business model is franchisable. Next, work out your business strategy, enlist a franchise solicitor, figure out your fee structure, find suitable franchisees, provide training, and then market your operation. Make sure you protect your brand with the appropriate trademarks too.

Can you franchise your business yourself?

While it’s possible to do the preparatory work to franchise your business, it is recommended you seek legal counsel from a specialist franchise solicitor when it comes to the Franchise Agreement.

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Content disclaimer: This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer here.

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