How to turn your business into a franchise

When wanting to move from running your own business towards running a successful franchise a number of things will need to happen. The first issue to consider is to ensure your business is attractive enough for others to want to buy into it. Apart from that you will need to ensure a market for the product exists outside of where you are currently trading supported by solid research figures and ideally evidence of what you are doing at the moment. Lastly and often the biggest challenge for the business owner is to capture the process of running the business effectively into an easy to understand manual which franchisees can follow once they have chose your specific franchise. Remember that that this will be run as a franchise and for that to work the franchisee will be looking to do everything the same as you do/did.

Market testing is an important part of this. If you cannot prove that there is a demand for the product or service your franchisees will be offering, they will be doomed to failure.

If you can demonstrate a clear demand for your product and service, you then need to prove that the franchise model works through the establishment of a pilot operation. The pilot operation will establish that all the back-up systems including training, operating manuals, financial support and marketing campaigns are effective. It will also give franchisees an indication of likely set-up costs, break-even points and how long it will take to become profitable.

The operations manual gives detailed information on how to set up and manage a new outlet. It highlights all the key activities, and explains how to do them the right way.

As well as preparing an operations manual, you also need to decide what support you will provide. This typically includes initial training for new franchisees, and continuing marketing and administration support.

Your brand is likely to be an important part of what you offer franchisees. Even if they know how to run a successful outlet, they stay with you because your brand helps them get customers. Protecting your brand is essential. For more information on brand management, see our guide on branding: the basics.

It is important that you put in place relevant protections to prevent your intellectual property (IP) being infringed (for example by registering your trade marks and company name or obtaining patents for your products). Once you have adequate protections in place you can then benefit from your IP through licensing. It is also easier to protect your IP if it is registered and you can prove ownership. See our guides on how to use trade marks in your business and protecting intellectual property.

Your operations manual and support services are an important part of this. They help to ensure that different franchisees do things the right way and provide consistent quality.

Is franchising right for your business?

Many businesses have used franchising successfully, including well-known names like McDonalds, Wimpy, Domino's, and others. However, franchising doesn't suit every business.

To start with, your business needs to be successful. Nobody will want to buy the right to franchise a business that doesn't make money. A franchised business needs to be profitable enough to make money for both the franchisee and you.

More broadly, your business needs to be one that can be replicated in different locations by your franchisees. Businesses that need high skills levels or professional qualifications can be more difficult to franchise but all the major optician chains have succeeded in doing so.

At the same time, you need to offer your franchisees something that makes it worth their while paying you, instead of simply setting up their business independently. For example, you might have a recognised brand name, provide equipment or supplies they need, or help with training and marketing support. For more information, see the page in this guide on how to develop your business format.

Having a well-organised and well-run franchise helps you recruit franchisees and is a strong incentive for franchisees to remain part of the franchise at the end of the initial franchise period.

You also need to think about the demands franchising places on you. You need to invest in developing and marketing the format. If you have limited financial resources, or are already working flat out running your business, you may not be able to do this.

Finally, you need to have the right skills and attitude to make franchising a success. You need to be able to sell your concept to potential franchisees, and to work with and control them. Rather than dealing directly with customers yourself, you profit by helping your franchisees to be successful.