It comes as no surprise that when you are thinking of growing and duplicating your business, franchising typically comes to mind. However do you know what it really means for you to franchise your business? Below are a few key elements to know about when considering franchising your business.
What Franchising Really Means
When you choose to franchise your business it means you are bringing other people into your system to learn about your business. This includes all the best practices you have developed over years of experience which has led to your success. You are giving other people (let’s call them entrepreneurs) permission to offer your services and sell your products under your name and to operate the business the exact same way that you operate it. When you franchise your business you now become a “franchisor” and you are responsible for teaching these entrepreneurs all your methods, processes, procedures and best practices so these entrepreneurs can be just as successful at operating the same type of business as you in their market (learn about your role as a franchisor). This entire concept is known as “business format franchising”. Basically these entrepreneurs are given a jump start into business ownership; saving them tons of time, money and frustration.
Not only are you helping these entrepreneurs (now called “franchisees”) get started in their own business; you are also committed to providing ongoing mentorship and guidance to share specific know-how, new methods and techniques that make operating the business efficient as your franchisees continue to evolve (see more on providing ongoing value to your franchisees). Franchising your business also means that you are committed to growing your system by introducing new products and services, keeping up with industry developments and creating different initiatives that benefit everyone.
Becoming A Household Name
Franchising is really a springboard for branding. While you may be well-known in your local area, franchising has proven to be a catalyst for becoming recognized in different markets. This often happens much quicker than if you tried to open more company-owned locations yourself. As different franchisees begin to open locations in different markets then your business name becomes recognizable and soon branding starts to take place. Eventually this means you become so recognizable that you become a household name (watch our brief video that explains how franchising is a means to dominate the marketplace). As your system becomes a brand typically there is an increased demand for the products and/or services your system offers.
Franchise Fee, Royalties and Ways You Make Money
Franchising your business also means there is opportunity for you to make money in several ways. You collect an upfront fee (read more about how the franchise fee is determined) for providing training and other deliverables to your new franchisees. Basically all the knowledge and wisdom someone needs to get started in business is being provided by you. The franchise fee is compensation to you for all your efforts. Besides the franchise fee that is collected, you also collect: royalty payments; perhaps you collect revenue from the sale of equipment, products or supplies sold to franchisees; and in most cases commissions or rebates from different vendors and suppliers who you require franchisees to purchase from to operate their business (check out our article to learn more about how to make money franchising).
Other Characteristics of a Franchise
There are other characteristics of a franchise which include providing a protected area, ongoing support, continuing to be pioneer of your industry and many more that would take too long to list. If you are thinking about growing and expanding your business and want to learn how to franchise and what it takes, lets chat. Call us directly at 1-877-615-5177 and we will be happy to go into further detail and determine if franchising is right for you.
- Franchising to Reach Your End Game
- Franchising Means Your Are Always Involved
- How Franchising Will Affect You in the Future
- Franchising is a Way to Generate Wealth
- Franchising a Restaurant
