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by Nathan Bridges
There are countless franchises that have failed due to fundamental mistakes in their franchising
models. Their failures are an advantage to you because you can now learn from all the mistakes they
have made. The following are 15 tips on creating a solid franchise business.
1. Make sure your business is making money. Nobody will buy your franchise if it doesn't make
money. By selling your idea, you are ensuring "repeatability", which leads to profitability. People
should be able to copy your business because it is making money. If your business is not
profitable, then you should fix that before even thinking about franchising.
2. Study your competitors. It is very important to know who is in the playing field with you.
You should keep an eye on what their strengths and weaknesses are. This will allow you to stand
apart from the crowd.
3. Make sure there is a market for your product/services. Conduct market research to see
whether there is a demand for what you are selling. Prospective franchisees want to know that there
will always be a steady market for the product/service.
4. Build a strong management team. Leadership is very important when it comes to building a
successful franchise model. Your management team should consist of both qualified managers and
consultants that have a strong knowledge of your industry. They should also have knowledge of
unique business and legal aspects of franchising.
5. Secure your trademarks, service marks, and other intellectual property. Your success lies
largely in your ability to distinguish yourself from competitors--to promise customers an
experience they can't get anywhere else. That's why it is crucial to take the legal steps necessary
to protect your trademarks, service marks, trade secrets, copyrights, business methods, process
patents, and more.
6. Ensure that you have a solid buffer of money. It is very important to make sure that
you're well capitalized. Franchising often requires more capital than people expect. Whether you're
merely starting off, or in the final stages, making sure you are well funded is critical. It's
unwise to think that you will start making tons of profit in your first year. Royalty income will
be minimal, and much of the income from franchise fees will be reinvested in training, marketing,
and paying down debt.
7. Ensure that you have all the necessary legal documentation that outlines your company's business
strategies and operating policies. A well-drafted Franchise Agreement and Franchise Disclosure
Document are mandatory when creating a franchise. Those who are just starting off can obtain
ready-to-use manuals from FranchisingMagic.com for a fraction of what an attorney may charge. The
Franchising Magic System is an entire comprehensive franchising solution. All their manuals, forms
and agreements are lawyer edited, and FTC-compliant. Your FDD must be prepared in accordance with
applicable state and federal disclosure laws, while your franchise agreement must strike a delicate
balance between your rights and obligations and those of your franchisees.
8. Establish a detailed training program. Your training program along with the operations
manual, is your opportunity to ensure that franchisees do things the way you want it done.
9. Put together top notch field support staff. Your ability to duplicate the level of success
and quality you've achieved in your prototype business is in the hands of your field support staff.
Select and train them well, ensuring they understand the mission behind your business, as well as
all the intricacies. They should be diligent in understanding the needs and concerns of
franchisees, as well as be responsive in addressing franchisee issues.
10. Create a comprehensive franchise operations manual. Producing an operations manual can be
painstaking and time-consuming. However there is no substitute for an informative, well-written
operations manual. For a step-by-step guide for creating a detailed operations manual check out
www.FranchisingMagic.com. They provide a detailed Operations Manual along with tips and guidelines.
Your operations manual is your crucial tool for ensuring that franchisees operate your franchise
according to your wishes, in a way that is profitable and protects your business' good
reputation.
11. Establish excellent relationships with lenders, suppliers, and other vendors. A strong
network of expertise and resources that you can count on is very important. In addition to
suppliers and lenders, you'll want to work with a good leasing company that can provide capital for
equipment and supplies. If you intend to lease equipment directly, be sure your lease agreement
contains terms that are favorable for you. Finally, registering your franchisee system with the
Small Business Administration will help ensure that your franchisees can secure capital to cover
their initial expenses.
12. Grow detailed research and development capabilities. Once your franchises are up and
running, it's up to you to continually provide new and refined products and processes to your
franchisees. Maintaining the status quo is a sure way to stunt the growth of your business.
13. Establish an effective franchisee screening system. Many people dream of running their
own business, but far fewer have what it takes to do it well. You'll want a solid process for
qualifying your franchisees based on their finances, business acumen, and character.
14. Set up effective reporting and record-keeping systems.This helps you routinely evaluate
the performance of your franchisees and ensures that royalties are reported accurately and paid
promptly.
15. Establish a comprehensive marketing program.Franchisees will look to you for local,
regional, and national marketing campaigns that increase sales. These campaigns should be based on
the measurable successes of your own marketing programs. Your campaigns will be aimed at customers,
of course, and also at new prospective franchisees, so you can keep your business growing.
Check out www.franchisingmagic.com for more
information regarding ready-to-use, lawyer edited, franchise agreements, manuals and forms to help
you get started with your business franchising.
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