A Comprehensive Guide to Business Franchising: 7 Steps to Franchise Your Business

Curiosity to explore new horizons and unleash new opportunities is the key to success! Aren’t we constantly searching for ways and opportunities to expand our business? One such business expansion opportunity is “BUSINESS FRANCHISING”.

What is business franchising?

In simple words, business franchising is a model where a brand owner allows business owners to use its products and brand model in return for stipulated fees. Franchising involves two parties—the FRANCHISOR (brand owner) and the FRANCHISEE (business owner).

Advantages of Business Franchising 

• For Franchisor
  • Quick expansion 
  • Less risk potential
  • Awareness regarding various local markets
  • Steady source of revenue
  • Brand recognition and enhancement
  • Better management performance
• For Franchisee
  • Proven and functional business model
  • Elimination of risks of starting a new venture
  • Marketing and Training assistance
  • Reduced competition due to exclusive designated area
  • Easier to generate capital and finances due to brand reputation 
  • Reduced costs due to bulk purchasing 

Why Franchise Your Business?

This model benefits not only the parties involved but the economy as a whole. 

• Leads to more employment opportunities 
• Enhances and encapsulates the human resource potential
• Reduces the risk concentration
• Allows brands to expand their market easily
• Enhances customer experience over geographical boundaries
• Provides enhanced opportunities for innovation and creativity 

Franchising is like a seed planted by a pair of visionaries, with the bounty flourishing to benefit many. It’s a win-win that transforms individual dreams into a thriving collective success!

Success stories of well-known business franchises

1. McDonald’s Franchising—King of fast food Franchising 

It was founded by the McDonald brothers in the 1940s as a drive-in restaurant for fries, burgers, and shakes. In 1954, an opportunist convinced the brothers to franchise their business and unleash its potential. Currently, McDonald’s has franchises in 40,000+ locations in 100+ countries.

Success factors: 

• Standardized menus and cooking techniques
• Adaptability to local cultures
• Aggressive outlet strategies to establish itself at prime locations

2. Subway Franchising – affordable fast food giant 

It was founded in 1965 as a small sandwich shop by a 17-year-old student. In 1974, the brand started to franchise due to high demand, and by the 1990s, it became the largest sandwich chain. Today, it has 37,000+ stores in 100+ countries.

Success factors: 

• Affordable franchise model
• Localised menu options and customisations
• Present as a fresh option in front of fast food culture

3. KFC Franchising- from secret recipe to global domination

It was founded in the 1930s with the signature fried chicken recipe in Kentucky. It was franchised in 1952 by adapting to faster cooking techniques while maintaining the crispiness. In the 2000s, it expanded to vegetarian options. Currently, it has outlets at 27,000+ locations in 150+ countries.

Success factors:

• Unique recipe with secret ingredients
• Effective brand storytelling
• Customizable options as per location, like Spicy Chicken in China.

4. Domino’s Franchising – Global Pizza franchise

Domino’s Pizza was founded in 1960 as a single store. In 1967, it started its first franchised location, and currently, it is the largest pizza company in the world, with over 20,000 locations across 90+ countries.

Success factors:

• Strong franchisee support system
• Technology and delivery innovation
• Focus on speed and effectiveness

Franchising Lessons learnt from the giants 

• Standardized menus and recipes
• Strong brand identity
• Adaptability to cultures and customization options
• Effective franchise model

7 Steps to Franchise Your Business

Step 1) Evaluate if Franchising is Right for Your Business

Before deciding to adopt this model, check if your business meets the following criteria: 

• • The business is profitable with a strong customer base
  • Is your business model replicable at different locations?
  • You have a strong brand identity with USP
  • How you provide profitability to franchisee.

All these points can be checked by performing market analysis and by assessing the reports and market trends.

Step 2) Develop an effective franchise plan

Once your business complies with the basic franchising requirements, the next step is to develop a plan, keeping in mind the following points: 

• Number of franchises and locations for the same
• Initial franchise fee + ongoing royalties (typically 4-8% of revenue)
• Resources and training you’ll provide to the franchisees
• National and local marketing plan
• Meting franchise regulations
• Setting up competitive pricing

Step 3) Develop a Comprehensive Franchise Disclosure Document (FDD)

Abiding by the law is very crucial to avoid any legal risks in the future. Franchising your business requires fulfillment of the following documentation: 

• Franchise Disclosure Document (FDD)
  1. Business History
  2. Cost and fees
  3. Franchisee obligations
  4. Expectations about financial obligations

Read more about FDD 

• Franchise agreement – A contract encapsulating the rights and responsibilities of both parties.
• Hire a franchise attorney to comply with all the regulations and strengthen your franchise foundation. 

Step 4) Establish Operations and Training Programs

An operation manual will ensure the consistency of workflow for all the franchisees. The manual should cover:

• SOP (Standard Operating Procedure) – Daily workflow, Customer service, and Quality control
• Brand guidelines—usage of logo, store aesthetics, and marketing rules
• Approved list of suppliers and streamlined operating process

The training and support program must include:

• Initial training – Training in operations, technology, and customer service
• Ongoing support – Regular inspections, fault-finding, and remedial measures
• Technology and Software – Coaching on POS software, inventory tracking, and CRM tools.

Tip: Adapt the online module to keep the franchises updated and ensure strict control to maintain the quality and brand identity. 

Step 5) Find and Select Qualified Franchisees

To attract and acquire quality franchisees, go through the following points:

• Create a franchise website showcasing franchise benefits
• Attend Franchise Expos 
• Leverage social media and ads  
• Use franchise expos

Make a list of potential franchisees and select the best ones that comply with your policies.

Step 6) Develop a Marketing Strategy

• Leverage brand strength for local marketing efforts.
• Utilize long-tail keywords for SEO optimization.
• Engage in brand storytelling to connect with the audience
• Focus on utilising various marketing channels
• Engage in Email and SMS marketing

Explore our blog for creative marketing strategies to help your franchise shine and stand out!.

Step 7) Final Launch and Expansion of the Franchise

• • Start with 1-2 pilot franchisees initially
  • Monitor the performance and update as per requirement
  • Expand into new cities and countries once the model is perfected. 

Franchise Models and Strategies

1. Product Distribution Franchise

The franchisee sells the products of the franchisor but under its name.

For example: Soft Drink Distributors

Advisable for: Companies with strong brand

2. Business format franchise

The most common form is where the franchisee gets a complete business system from the franchisor.

For example: Subway, KFC

Advisable for: Restaurants, retail stores, service-based businesses

3. Master franchise

The franchisee acts as a mini franchisor in the designated area. 

For example, McDonald’s in India is operated by a master franchisee instead of the corporate office.

1. Area Development Franchise

The franchise gets exclusive rights to open multiple stores in a specific area.

For example, A company getting the right to open 10 subway stores in a city

Each franchise model has its pros and cons, so selecting the right approach depends on your industry, business goals, and expansion capabilities.

Challenges and Opportunities in Franchising

• Common Challenges Faced by Franchisors
  
  • Difficulty in maintaining brand standards leading to different customer experiences
  • Difficulty in selecting the appropriately profitable and skilled franchisee to avoid reputation damage
  • Expensive process and requires huge upfront investment in legal formalities
  • Different countries have different laws for this model
  • When too many franchises open in the same area, they risk cannibalization, competing against each other and potentially harming their success
• Future Trends in Franchising
  
  • The inclusion of AI and automation can improve franchise management.
  • Consumers’ demand for eco-friendliness leads to sustainable practices by the franchise
  • Rapid growth of health and wellness franchisees
  • Collaboration with complementary brands to expand reach 

The future of franchising is glowing with potential! 🌟 As we navigate this dynamic landscape, businesses that embrace adaptation and innovation and prioritize customer experience will not just survive—they’ll truly flourish. Get ready to seize the opportunities that await! 

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