Are you interested in expanding your business, but unsure of where to begin? This brief guide will explore several of the possible options for business expansion. One instance is to continue operating from one location and aim to expand your customer base. This option, on the one hand, keeps the cost of expansion low but can also be limiting. One location can only handle so much increase in business. A second option is to expand the business model into multiple locations. This can be accomplished on a small scale with additional locations in relatively close proximity to the original location or can be done on the large scale. Large scale expansion would look like locations placed strategically throughout the entire state or even moving into the national market. Adding multiple locations does, however, require a significant amount of capital and the original business location will bear the full financial responsibility of this. But there is a third option to consider, which could be to franchise your business. This option opens the business up to the development of additional locations, but without the working capital required to open multiple locations on your own.
Why franchise your business? Expansion of your brand and business model through franchising allows you to create consistent growth of your business while benefitting from the capital risk of others. The franchisees become the owner and operators of their specific locations. They are responsible for the day-to-day operations and the financial expenses of their business. As the number of franchise locations grows the overall business will gain greater buying power - a savings that will be shared amongst franchisees. But, dare I say, the biggest advantage of expanding through franchising is increasing brand awareness which benefits all locations. The rapid expansion through franchising grows the brand and increases recognition, quickly but also effectively.
When are you ready to franchise your business? Franchise development like most great business moves takes strategic planning, foresight, and tenacity. It is for the visionary entrepreneur business owner that is ready to take their business model to the next level. The business, first off, should be successful. It will also need streamlined and time-tested processes and procedures in place. These processes and procedures will develop into the operations manual for new franchisees to follow and will guide them to success with their location. The original owner, at this point, will take themselves out of the day-to-day operations of the business and move into a franchise leadership role.This will free up the owner to develop the brand and its strategy and provide sales support and business consulting for franchisees.
What are the steps for Franchise Development? Franchise development encompasses multiple steps to obtain Federal Trade Commission approval and the appropriate documentation. The most important document crafted will be the Franchise Disclosure Document (FDD). This is a several hundred page document that discloses information about the franchisor and the franchise organization. The purpose of the document is to provide enough information about the franchise to allow potential franchisees to make an educated decision about their investment. The FDD also includes the Franchise Agreement (FA), this is the legal document signed by the franchisee and franchisor that allows the franchisee to open and operate a franchise location. Other additional documentation includes the Operations Manual (OM), which will act as a guide for the franchisee on how to operate the business. The timeline for preparing the franchise operation documents can take as little as 3 months or extend 6 months. Franchise development will also include sales and marketing plans on how to attract potential franchisees, twelve months of consulting to assist the first franchisees and registration for sales in the required states.
If you would like more information on franchising or are interested in buying a franchise please schedule a consultation with one of our brokers today!
Anne Schuller is a Certified Franchise Consultant (and Business Intermediary) for Transworld specializing in franchise development and sales. After an 18-year career as a physician assistant, Anne combined her entrepreneurial passion with her altruistic nature and career experience by becoming a certified franchise consultant through Business Alliance Incorporated. Working with over 500 franchise companies nationwide, Anne seeks to pair qualified candidates with pre-established franchise systems, as well as establish new franchises for business owners looking to expand their companies.