Selling a franchise is one of the best ways to capitalize on your brilliant business ideas. Some of the biggest companies in the world, especially in the fast-food industry, operate exclusively on the franchise principle. Brands like McDonald’s, Wendy’s, and Taco Bell, don’t own a single restaurant directly, yet, they’re still flagships of the industry.
- Still, where does one start from in order to establish a franchise?
- What are the tips to follow in order to maximize profit as a franchisor?
- How much do you charge and how much support do you provide?
Here are some tips to help you with these important questions.
1. Your Brand Is Your Product
The first thing you need to do is treat your brand as a product. This is why you need to increase its marketability and make it clear just how much value the franchisee stands to earn by doing business with you. Sure, the most successful franchises don’t have to spend much time promoting their brand. Their presence draws attention by default and everyone wants to be a part of it. However, as a relatively young and growing brand, you’ll have to spend some time establishing yourself in the market.
2. Choose Who You Work With
Selling a franchise to the wrong franchisee is a potentially dangerous move. You see, a lot of people have no idea how franchising works. For instance, McDonald’s doesn’t own a single restaurant directly – they are all franchises. This means that the management of each restaurant runs its own business. If they do their job poorly, the reputation hit will impact the entire brand. Dissatisfied customers will rate the entire chain negatively and have a negative opinion based on this one franchise.
There’s a lesson to be learned here. Sometimes, it’s not just about selling a franchise. It’s also about considering the long-term net gain. A temporary income from selling a franchise might not be worth a slandered reputation that will happen as a result. So, it might be worth conducting an elaborate vetting process before you start doing business with someone.
3. Provide Support
There are two benefits to providing support to your franchisees. First, when you include this support in the offer, you’ll make it more appealing and valuable. Second, you’ll ensure that your brand follows the same course you’ve plotted even under different management. Keep in mind that this increases your cost. Even if it’s just your advice, your time already has a value that you should never underestimate. So, it’s vital that you make an equation of the amount of support that you can provide in order to still achieve a net value gain.
This help comes in many forms and formats. One of the things you can do is assist with employee training or franchise furnishing. Both of these things are vital for keeping up with brand consistency.
4. Give Some Room to Flexibility
While you may want your franchise to have the same quality of service everywhere, trying too hard to achieve this can make your structure too rigid. Sure, people who decided to buy a franchise have already given up the idea of starting their own original business but this doesn’t mean that they don’t want to leave their own stamp. Give them this opportunity.
People running franchises need to feel like entrepreneurs, not just regional managers. Sure, people’s expectations differ and you can’t run a business based on sentiment alone. Still, keeping your partner’s happy is a key to support, regardless of the field that you’re in.
5. Set the Right Price
The cost of a franchise needs to be determined by a number of different factors. Setting a price that’s too high will discourage some potential franchisees but lowering it might debase your brand as a whole.
Make sure that you do the research and do the math of what you provide against what’s fair for you to charge. This is often the hardest part, seeing as how there’s not much data available. So, you might have to get involved in some good old corporate espionage. Simply find a business that sells franchising rights similar to yours (comparable competitor) and pretend that you’re an interested party. Doing this a couple of times will give you an idea of what you’re up against.
The last thing you need to understand is that success in any field cannot be built overnight. When just starting out, there’s literally no benefit to buying your franchise. After all, what advantages do you offer to someone who can just start their original business?
However, once you hit off, with every franchisee, your influence, your reach, and your credibility will increase. Seeing as how the growth from this point is exponential, you need to arm yourself with patience and learn how to prepare for success
Also read: 7 Branding Ideas for Your Consulting Firm