Franchising a business can seem like a really easy solution to business expansion, and it is easy if you follow the correct processes. Business format franchising, which is what most franchises in the UK are, is all about processes. Get those processes right and you will have a successful franchise group.
In truth it’s simple to do but it’s not always that easy. There are a number of things you need to understand if you want to make a success of your franchise group. Getting each one of the steps right is the hard part. Let’s take those steps one at a time over the next few months:
Understand the terminology:
- A franchisor is the owner of the brand
- A master franchisee will have the rights to develop the brand in a particular area or country
- A franchisee has the rights to use the brand to replicate the pilot operation in a given area
- The pilot operation is the business(s) used to create, test and refine the processes in the business
In very simple terms, as a franchisor you are helping someone else to create a business like yours.
Your franchisees will most likely have the right to a particular territory. This territory, restriction usually is for marketing purposes but can be more restrictive for some franchise models.
One of the biggest mistakes franchisors make is this is that in the early days, they tend to give huge territories that can’t possibly be run from one outlet, without a clear plan to develop the area. This can have a detrimental effect on your business. You are limiting the number of outlets you need to create a truly national franchised offering, and thus limiting your growth and income potential.
It’s important that you have a clear vision for the business and that your franchisees understand that vision. You, just like your franchisees should have a plan for the future.