A Practical Look at Franchising!
by Ken M. Hollowell
There is not any doubt as to its success but the vital questions are if it is best for you and whether you are ready to be a franchisor.
Your existing business ( the underlying concept which you want to franchise ) is another business. It's necessary, , for you to start adjusting your thinking to the new business to hand. Inversely, some less than excellent concepts have made a name for themselves as a consequence of a superior franchise system.
The single most important facet of any franchise system is the trademark or service mark which is being licensed to the franchisee. Your first priority should be to design a completely unique mark by which your franchise system and its products will be identified. You then must search the files of the central government and the states in order to resolve whether anybody else is presently using the same or a corresponding mark. If you have a green light, you may go on to secure a registration of that mark for yourself.
The offer of a franchise is subject to state and federal rules. The penalties for failure to go along with those laws can be damaging both to our pocketbook and your reputation. You should present prospective franchisees with a specially prepared declaration document ( known as an offering circular ) in stern obedience to those regulations at least ten working days before they sign the franchise agreement or pay you any money. There are also 15 states which may require you to register the offering and submit the disclosure for review before promoting can happen inside their jurisdictions. Furthermore, any type of advertising which is used to solicit a possible franchisee must obey governmental laws. there is more to being a franchisor than simply having a franchise agreement and an offering circular. The franchisees who receive that disclosure and at last sign the agreement must be trained to operate an outlet in a managed way. , an operations manual must be prepared and a coaching program should be in place . A staff of qualified people who will run the franchisor's organization and train the franchisees must be assembled. Therefore any existing manual which merely summarizes the day-to-day conduct of your present business won't be acceptable to elucidate to a franchisee how she or he is to operate your idea. You must develop a program of continual field support to help franchisees with Problems which they may run into in daily operations of the outlet. The team assigned to that function will also monitor and report on the franchisee's observance of your standards. The creation of an aggressive advertising campaign to push your franchised outlets and the image which you wish them to convey to the market is of greatest importance.
although federal and state laws do considerably repress your ability as a new franchisor to indicate the earnings potential of an outlet to a potential franchisee, it is still smart to have a prototype of the common outlet in existence to indicate the feasibility of the concept and your actual hands-on experience in its operation.
It is also advantageous from a sales perspective to have a facility which a possible franchisee can visit since you will be engaged in a new business ( franchising ) ; your existing business needs to be secure enough to function without your daily collaboration. Similarly, do not expect to raid the ranks of your present organization in order to staff the new business. Remember, they have got to be replaced.
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