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FranFinders – How to Build a Franchise

There’s one question we get from existing business owners, “I want to franchise my business, how do I do that?” The answer is simple; have a business that is “Franchisable.” What do I mean by that? Here are 3 tips on how to build a franchise.

1 – Make sure your business is making a profit. If you are losing money in a business, then it makes no sense at all to pass the misery on to others. But, unfortunately, some owners think that by expanding by franchising, that by having the term “franchise” in their name will automatically make them profitable. Wrong answer. You need to have at least 3 years of positive growth to even consider expanding through franchising.

2 – Make sure you can support another site. If you’re making a profit with your first store, you’ll need to be able to support other owners in different locations. I suggest expanding to another location on the other side of the city or close by town in which you can then establish the systems to support a satellite store. Once you have that unit running at a profit, you are one step closer to building a franchise.

3 – Have the capital committed to the growth of the franchise. Far too often, newly minted franchise systems come out with their shiny Franchise Disclosure Document and Franchise Agreement, with absolutely no capital to put into franchise development, or for building supporting infrastructure. The best practice is to put a support team in place, along with a development budget that will take you well into 12 months of aggressive marketing. Anything short of that, you’ll probably fail.