When is the Right Time To Franchise Your Business?
Franchising can be one of the most effective and powerful tools for expanding a business and brand available on the market today. Many industries have leveraged franchising to grow businesses including retail, food service, pet service, healthcare and many others. In today’s market, over 3,500 franchises are on the market in the U.S. alone.
How does the franchise model work?
1. Franchisees who want the right to operate your business and learn from you how to build a business using your intellectual property, experience in the industry and brand will pay an initial franchise fee for the rights to use your name and system. Franchise fees range from $25,000 to $50,000 in most cases and are paid upon signing the franchise agreement.
2. The Franchisor then trains, supervises and coaches the franchisee to help them get the business up and running and begin the process of opening a location of your business. This includes training held at the corporate business, typically 1-4 weeks of time, training held at the franchisee’s place of business, typically 1-3 weeks of time and an ongoing mentorship program where the franchisor supports the franchisee in operating and running their new business for the first 1-3 months.
3. After the franchisee has opened their business, they pay a royalty percentage back to the franchisor for the continued right to use the name, system and brand. Royalties will range from 3-10% of Gross Revenues and will be paid either weekly or monthly depending on the industry segment.
4. Franchisees are typically granted a territory which offers some form of exclusivity or protection to them and their business in that market. The area may be defined as an area of primary responsibility, exclusive territory or development area.
5. The Franchisor’s role becomes one of a strategic partner to the franchisee, helping move the business forward, look for new marketing and strategic advantages and continue to provide support to the franchisees in the field operating the unit locations.
Why has franchising had such an effective track record?
1. Franchisees bring an owner operator mentality to the business. With skin in the game, they are intensely focused on making the business work and driving profitability.
2. The Franchisor is able to leverage economies of scale that come with growth and new market expansion. Product and supplies cost less with group purchasing power, advertising is broader and wider reaching and the business gains credibility with new franchisees joining the system.
3. The Franchisor is able to operate the business with a lean management team and lower overhead than company owned growth.
For more information on how to franchise your business, contact us: https://franchiseconduit.com/contact/