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How to Form a Franchise

February 2nd, 2012

Your business has grown beautifully and you now have several satellite locations to serve a growing customer base. You’re facing the prospect of opening more satellites but that means finding new locations and new employees. The paperwork and taxes involved are a nightmare. You’re ready to release control of some of the responsibility of your business but you don’t like the idea of licensing your name. You want to protect your business name and be sure new partners will deliver the same service people have come to associate with your name. Franchising seems a good way to go but you have no idea how to form a franchise.

Before you look for franchisees give yourself the security of a plan. Determine if the potential earnings from franchising will support the network you’ll need to put in place. If the prospective profit margin is too narrow to support both you and the franchisee this may not be a good way to go.

Develop training material and programs in advance. Your business reputation depends on your franchisees being able to provide the same quality of service you do, so be ready to teach them how to do it. This is a major expense compare the cost against the prospective results in advance. Contracts protect both you and the franchisee. You can attract quality franchisees with a fair contract to protect the partnership. Get your legal team in place before you look into how to form a franchise. You’ll save yourself tremendous expense.

The most common cause of franchise failure is greed. Once you start franchising and making money its easy to fall into the trap of growing too quickly. Plan your franchising options around your ability to offer support to your franchisees and your customer base. Plan how much growth and where you want that growth to occur before you begin.

Right now your head is already swimming with the details of doing business and the idea of doing all this planning before you even begin to learn how to form a franchise is frustrating. It will be worth it in the long run though. By planning your course before you start you’ll have a clearer idea of where you’re going and how long it will take you to get there. If you are doing enough business to consider franchising you should already have legal representation. You can give the task of contract preparation to them. You have an accountant give the job of planning for the future and weighing the pros and cons to them. A business manager or a good consultant is a good idea now if you don’t already have one. » Read more: How to Form a Franchise

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Posted in Franchising

Tags: business reputation Franchise idea satellite locations

Creating A Franchise Business Plan

February 1st, 2012

The major difference between a business plan for a traditional start-up and a business plan for a franchise is that the latter must join necessary items together from both sides-the franchisor and the franchisee. Creating a franchise business plan is necessary for you to anticipate and think through questions about the challenges you will face and the expectations you have for the business.

The business plan is also needed if you require financing from any third-party source, since this is the first document they will ask for. The franchisor will already have a good deal of information to include in the narrative parts of the plan, as well as most of the financial information you will need in the Uniform Disclosure Offering Circular (UFOC) disclosure document.

The main sections of a franchise business plan should include:

Introduction: Here you will include a cover sheet listing the name and contact information for the business. You should also include a description of the business, including the product or service provided, the size and competitive nature of the market for the business, and a description of the steps you will use to take the business to market.
Management: A description of the key management roles, including names and background information. Resumes could be used to highlight prior experience relevant to success in your new business.
Marketing: You will include details of how you plan to attract customers to the business and any competitive advantages you predict the new business having. In addition, you need to provide detailed marketing and advertising strategies you will use.
Financials: Income statements, cash flow statements, and balance sheets are necessary to show future performance projections. Your statements should also include extensive notes concerning all tangible assumptions you have used to prepare the projections. It is important that these projections be prepared on a very conservative basis, since you cannot predict any unexpected delays or challenges that may happen on any new business startup.
Financing Needs: Even if your funding is coming from your own savings, detailed financing needs will better prepare you for whatever may happen as you get the business set up and operating. This section should contain an analysis of all startup costs, including enough working capitol to cover initial marketing plans and operating losses until the projected breakeven point for the business. » Read more: Creating A Franchise Business Plan

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Posted in Franchising

Tags: cash flow statements disclosure document Franchise information

Tips for Franchising a Business

January 15th, 2012

When you decide to turn your business into a franchise, or join up with a franchise business, you are taking a big risk. The only way you can best assure that you will come out on top of a decision is to act with as much intelligence as possible. You have to play it smart in order to succeed in franchising a business. Here are some tips that will help you do this.

The risk has already been mentioned. Of course, the first step is to be prepared for such a risk. You need to be aware that the money you are investing will be large, and you may lose out on the risk because your move may not be a successful one. This could happen with such a significant change to your business.

Another part of considering the risk of franchising a business is planning for it. Make sure that you won’t go under if your move fails. This involves having enough money to make it through some tough times if you encounter them, and you most likely will. Make sure that your business can handle such a hit without you going completely broke.

When you decide to franchise your business, you will need to create a business plan. Having a good business plan will increase your chances of succeeding. There are several things about a business plan that need to be included in order for it to be thorough and work well. You need to have a good plan of what will happen with your business that is flexible enough to compensate for things that occur that are unexpected.

You need to be prepared for the unexpected when franchising a business, as with any business venture. Nothing ever goes according to plan when you attempt any business move. This is pretty much a guarantee. Be prepared in your plan to think on your feet and be able to change your plan to make things work successfully.

When you are franchising your business or taking on the name of a franchise for your own business, there is one thing that you must remember above all. You must, at every turn, do your research. You have to thoroughly know all about every decision you make. This will help you act with the most knowledge possible. » Read more: Tips for Franchising a Business