Know When to Grow: Everything to Consider Before Franchising Your Business To Venture Further into The Market

Every business owner dreams of growing their business and venturing further into the market. However, business expansion demands substantial capital investment, which is not feasible for most SMEs. Nevertheless, one way to surpass this deterrent is by franchising your business.

If you run a small enterprise that can be easily replicated, consider franchising in order to rapidly expand your horizons without putting in vast sums of capital. If you take the right path, franchising can significantly transform your business’ scale and profitability.

Evaluate your business model and consider whether franchising is a step towards growth. Before hopping on to the idea of franchising, it’s imperative to wrap your head around it first.

What is a franchise anyway?

A franchise facilitates the expansion of businesses to new locations without the owners having to manage it themselves. Franchising a business allows third-party investors to purchase the rights to a business’ branding, trademarks, and company practices.

After receiving the upfront fee from the purchasers of the franchise, the franchise owners collect monthly royalty fees depending on the earnings of that particular franchise. 

The franchisee does not need to establish a company culture, set up business practices, or build a market share since all of that is accounted for by the franchisor.

Things to Consider Before Franchising

Here are all the key factors you must consider before franchising your brand and setting up your stores in new locations.

Business Model Evaluation

First and foremost, you must evaluate your business model to determine if it can support transitioning into a franchise. Your business must bring a unique element to the table, since you want to entice investors to purchase your franchise.

Examine any unique selling points (USP) your business can offer or demonstrate success with well-devised planning or state-of-the-art techniques. Your end goal is to encourage a franchisee to purchase your franchise by convincing them of profitability margins.

Once you’ve sold your franchise, the next step is to successfully market your brand by using dynamic marketing tools like blade flags or custom outdoor banners so that you don’t miss out on potential customers.

Choose your Franchisees Carefully 

Franchisors often sell franchises to anyone willing to pay in exchange for rapid business growth. However, to enjoy long-term success, you must pick your franchisees carefully. While capital is necessary, you must find a franchisee who believes in your business model.

Since you’ll have constant interactions with your franchisees throughout your professional relationship, you must pick self-motivated personalities who portray qualities such as: 

  • Being passionate about the industry. 
  • Positively responding to criticism and advice.
  • Genuine brand loyalty.
  • Having a vision for business expansion.
  • Having a flexible lifestyle and prioritizing business growth. 

Review and analyze your staff members whose goals and ideals align with your business model and those who are loyal to your cause. Recklessly selling your franchise to loosely-motivated people can tarnish your reputation in that particular location.

Gather Legal and Professional Advice 

Regardless of your experience in any business, it’s recommended to seek legal advice before franchising. Seeking legal and professional advice often requires capital investment; however, it will be worth every dime since you’ll receive insights that might help you in the long run. 

You can also seek advice from established franchise owners if you’re in contact with one. Always consider getting in touch with a lawyer or a professional franchise consultant to seek advice on the following:

  • The franchise fees, royalty percentage, and agreement conditions
  • Locations to franchise your business 
  • The type of training that you must provide to franchisees
  • Business experience or monetary funding required by your franchisees
  • Your assistance with marketing activities

You must also pick the right marketing items once your franchise is set up and ready to open. BannerBuzz offers some of the finest marketing tools used by several businesses for brand promotion in both indoor and outdoor spaces.

Be Supportive of the Newly Set Up Franchises

After selling your franchise, you must follow up by providing support and training to your franchisees. Even if your chosen franchisee is an experienced employee, do not assume they know how to govern a franchise at higher levels.

Actively indulge in the initial days of setting up your franchise in a new location and impart insightful information to your franchisee. If you cannot be physically present at that location, hire personal trainers to provide training and support. 

Ensure that you impart guidance to your franchisees and monitor their progress periodically. You can also hire brand ambassadors to promote your franchise and spread the word about your store opening in a new location. Set up effective promotional marketing items such as custom banner stands outside your stores to capture the attention of passersby.

Legal Formalities for Franchising

The first step involves your franchise lawyer preparing and issuing a Franchise Disclosure Document that directly complies with federal and state law. You’ll also have to register or file your FDD with states that require FDD registration and filings to make your business eligible to sell franchises.

Here are the legal steps that you must follow to franchise your business:

  1. Franchise Disclosure Document

Prepare your FDD in direct compliance with federal and state-specific franchise regulations and ensure that it’s specific to the business as well as the franchise that you’re offering.

  1. Operations Manual

The next step is to provide a confidential operations manual to your franchisees, which helps inform them about all business operations requirements and the relevant knowledge required to build, set up, and operate the franchise.

  1. Trademark Registration


It’s imperative to have your trademarks registered with the United States Patent and Trademark Office before associating them officially with your franchise.

  1. Register and File Your FDD

Before officially selling franchises in franchise registration states or franchise filing states, you must file the relevant notices and applications. Be aware of state-specific laws, registration formalities, and filing requirements.

  1. Set a Budget

Monitor and analyze your target franchisees and markets in order to set a realistic budget for bringing in, training, and guiding franchisees throughout your journey.

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