Steps to take before franchising your company
- Friday, April 27, 2012
Business owners may be playing with the idea of franchising their company to others. Franchising can be a smart business move, but it's also not one that is to be taken lightly. There is a great deal of information owners will need to absorb before making the decision to become a franchisor, and following the proper steps can help make the transition to a franchise easier.
Before interviewing potential franchise owners, it's crucial that business owners develop strict and detailed guidelines for how their companies are to be operated, according to Entrepreneur Magazine. Business owners who are running one company have developed the insight to manage day-to-day operations smoothly, anticipate problems and respond quickly to issues. In addition, they are educated on their local market, customer base and competition, which allows them to operate more efficiently and make better decisions about advertising their products based on these factors. This may not be the case when they open several franchises in a variety of locations. For this reason, it's crucial to develop a business strategy and outline that new owners can follow to successfully run the company.
After creating guidelines for franchises, owners should contact legal representation, a tax preparer and financial professionals to ensure they follow all the proper protocols for turning their business into a franchise. In addition, working with professionals can help owners gain insight into their new responsibilities as a franchisor and the financial ramifications of their decision.
Owners should also determine the type of limitations they want to place on franchisees regarding operations, marketing and advertising and opening new locations in the future. While they may want to give their franchisees some independence to make decisions, business functions should remain consistent. Franchisors have a lot of authority over how their want their franchisees to run, so it's important to put them in a concrete contract.
Interviewing individuals to run franchises is another important aspect of getting operations up and running. Finding an individual that can adequately represent the original franchisor's goals and message should be taken with great care, because this person will be the face of the company and brains behind the operation. To make sure they are successful, franchise owners should not only judge their background, skills and qualifications, but also their character and passion for the company.
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