Franchising Step 2: Adjusting the Business Essentials

Once you have a clear idea of your franchise system and the kind of people you need to run each bit, the next step is to think about the business adjustments needed to form the foundation.

By creating a franchise group, your changes will be necessary to almost every element of your business—from working out who does what, to identifying what needs to be changed.

It’s all about the marketing

Because it’s front and center, the first business essential you have to look at is your marketing. Spot-on marketing and your branding are part of the fundamental responsibilities of any franchisor. You have to make sure what you settle on is going to work for everyone.

Who does what?

What are you going to do for the whole group? In almost every case, you, as franchisor, will take responsibility for the overview, the website, social media, and any national events and advertising.

Three people having a business meeting at a roundtable

For many franchises, especially in the service industries, it might be important for you to take incoming calls and allocate them to the right franchise. That’s how Jim’s Mowing started all those years ago—and look at him now. Just the mowing part of the Jim’s Group has over 1500 franchisees.

Budgets, cash flows and fee structures

This part of your business adjustment starts with reviewing budgets and cash flows. You need to know exactly how much each part of the system costs to run, how they are going to be funded, and the amount of profit they’ll make.

Both sides must have the best chances of making a profit. Profit makes for happy franchisees, which helps the success of the whole group.

So first, work out how each side of the franchise group is going to deliver what is required, and then do realistic budgets and cash flows to make it happen. Once you have these in place, take a stab at working out how much is a fair initial fee to charge. From there, you can calculate what’s needed to provide franchisee support going into the future.

At this stage, input from a good franchise savvy accountant and franchise consultant with on the ground experience will be needed.

Establishing territories

Territories worry people, even though they’re established for the greater good. So at the beginning, take a low-key approach. If you do need them, work them out using the demographics from your branding and the outcomes of your budgets and cash flows.

Man writing on a whiteboard

And don’t become obsessed with working them out for the whole country to begin with. Start with your local areas and grow it from there. But if you do really need them, a specialized territory specialist might be the way to go.

Business fundamentals

The structure of your business, as it stands today, will likely need to change to protect yourself and the whole group. You will almost certainly need to protect your brand with trademarks, which is why it’s so important to make sure your brand is right from the get-go.

Also, look after your franchisees’ business management skills. Legislation makes franchisors responsible for the way franchisees manage and pay their staff, so your keen understanding about what’s involved and what documents you need is integral.

You will also have to check to make sure your franchisees also understand the ramifications if they get this bit wrong. So get advice from a good accountant and lawyer specialized in these areas.

Training, communication and support

This is the second fundamental task of any franchisor and it’s an important one. Get it right and you’ll have a wonderful group of franchise partners helping you grow your business into the future. Get it wrong and your unhappy franchisees can make life difficult.

So, what next?

We know preparing your business for franchising can be overwhelming, but it doesn’t have to be! Just reach out to the expert team at Franchise Simply so we can make the process easier and faster for you!

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