Business owners have a lot of planning to do before they get up and running with a new franchise venture, starting with developing a comprehensive business plan. A strong business plan includes several parts – such as a detailed startup timeline, budget and ideal development team.
A Time for Everything
Developing a realistic timeline for your goals is essential. It guides you through the ramp-up process and beyond. Keep in mind, as your business grows and you set your sights higher, it will take longer to complete your goals. So, be flexible. Some things you should include in your timeline are:
- How many corporate units you need to establish a solid proof of concept
- How long the corporate units need to be open before you begin franchising the concept
- How much money and time will it take to achieve royalty self-sufficiency
- When to begin franchising and you will need in terms of operations, infrastructure and support at various points
- How many franchisees you want in the first, second, and third years – and so on
- What benchmarks franchisees must meet and what you will do to support them
- When you want to enter new markets
Put Your Money Where Your Needs Are
Just as important – and working hand in hand with your timeline – is the budget for your growing franchise system. When developing your budget, you will realize why being well-capitalized is crucial to grow your franchise concept.
Make sure to budget for:
- Franchisee training and ongoing support ‑ The basis of a successful franchise network is strong training and support programs These programs must provide franchisees all the information and assistance they need to launch their locations successfully, as well as help managers and staff perform their roles effectively. Training and support must facilitate ongoing improvement and development, too. It’s important to guide franchisees through the entire process of launching a new location, but, training and support don’t end when they open the doors. Be prepared to provide ongoing operational support.
- Legal fees – Your budget should allow for a range of legal expenses. Trademark registration, development of your Franchise Disclosure Document (FDD) and franchise agreement, and franchise registration are some of the legal fees to prioritize.
- Trademark registration – To guard against copycat brands, trademark your brand name, tagline and design.
- FDD and franchise contract – With 23 required items, developing an FDD is a cumbersome task. A franchise attorney or experienced franchise consultant or advisor can help you create an FDD that meets industry best practices and includes all necessary information. Your FDD must include financial performance information if you want to discuss sales and profits with potential franchisees, as regulated by the Federal Trade Commission. When developing your FDD, avoid omitting information or including misleading information. Likewise, your franchise agreement should contain clear legal language that governs the franchisor-franchisee relationship for the duration of the contract.
- Franchise registration – The sale of franchises must comply with state and federal franchise laws. Some states require franchisors to register their FDD's and maintain that registration with a state agency, which requires franchisors to pay a fee. While emerging franchisors do not need to file national applications as they begin franchising locally or regionally, they may want to budget for it down the road, when growth picks up.
The Right Team
As an emerging franchisor, you will probably spend a lot of time discussing your brand with franchisee candidates. But, you will have numerous other responsibilities outside of sales. To keep franchise development on track, you must assemble a qualified franchise development team.
The members of your team should know and love the brand as much as you do so they can find franchisees who are the right match. After all, your brand is only as good as your franchise partners. If your development team brings the right franchisees on board, sales will likely become easier, since those first franchisees can validate your brand’s opportunity.
For help getting organized to franchise your business, turn to Winmark Franchise Partners. With 30 years of franchise experience and more than 800 franchise owners representing more than 1,200 locations for five brands, Winmark Franchise Partners can help grow your brand through sound strategy and expert franchise advice.
For more information, contact us here or at (844) 452-4600.