Your business is bringing in the sales. In fact, you’ve expanded by opening a couple of more locations that are thriving. Now, you want to grow even more, and are considering opening a franchise. The next step is to develop a franchise concept that helps you take a closer look at what you offer and what you need to accomplish to market your idea to potential franchisees.
Development starts with examining your reasons for opening a franchise, such as to build your business more quickly or to establish your company name as a household brand. Look at how many establishments you already have open. Owning at least two is key to knowing if your ideas, procedures and marketing efforts work for all of them, an initial indicator that your idea is easy to duplicate. Decide if you have the time and resources to focus on building the franchise rather than on your current businesses. Review the finances available to develop your concept, since it takes time and fees to complete all of the paperwork required to make the franchise legal and operable.
Once you decide to move forward with your franchise idea, determine what makes your business unique. Your unique selling proposition gives you a competitive edge so your chain of businesses stands out from competitors. For instance, if you own a pizza franchise, identify what’s special about your pizzas, the delivery or the ambiance that makes your pizzerias seem different than the others. Many franchises offer a familiar product, but add an unusual twist that makes the establishment memorable.
Now you’re ready to start building the foundation for the franchise. This involves creating manuals of policies and procedures that show franchisees how to operate and manage their establishments from the moment they open the door to the time they close. The manuals also act as a legally binding document to control the quality of the chain. You also need to prepare a training program and provide tools, such as videos and manuals, to explain each franchisee employee’s responsibilities and how to handle them.
Before you start marketing your concept to potential buyers, you must complete and file the lengthy Franchise Disclosure Document required by the Federal Trade Commission. This document details everything about your franchise, including explaining the costs, franchise fees, operation details and training procedures and policies. The disclosure must be provided to potential buyers 14 days before you take a deposit or the prospect commits to buying a franchise. If you plan to open your franchise in other states, find out each one’s requirements for opening a franchise. Some states require you to fill out additional paperwork and pay fees to operate there.
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