Answering the “how to franchise” question is relatively straightforward. Before we get to that, the starting point is to realize a franchise your business program allows your company to get out of the trenches and become highly-paid generals overseeing your soldiers.

Long-term options are also attractive. Build an empire and relax, or let the franchise company be acquired by an increasing number of large, international companies that are looking for small, but growing U.S. franchise companies to take to the next level. According to the International Franchise Association, 900 new companies have franchised in the last three years.

FRANCHISE FEASIBILITY

The first critical step in how to franchise is conducting a feasibility analysis. Is the business model successful? Can it be replicated and taught to others? Are their any underling problems that need to be addressed? Franchising will not solve existing problems; it will only make them worse.

STRATEGIC FRANCHISE PLANNING

The second step in how to franchise is strategic franchise planning. Especially in the franchise industry, if you don’t plan for success, you set yourself up for failure.This happens frequently with new companies entering the franchise industry. They mistakenly use a franchise consulting firm or franchise attorney without an MBA, where little or no attention is paid to critical strategic planning issues.Creating enduring franchise relationships requires a comprehensive strategy and vision that addresses all aspects of the franchise endeavor.

FRANCHISE OPERATONS MANUAL

The third step in how to franchise is developing a franchise operations manual. Written correctly, an operations manual is a daily reference tool, guiding someone unfamiliar with your business through the day-to-day operating procedures. An operations manual is often called the Bible of Operations. Using boilerplate, templates or using a franchise consultant to develop this key document can not only be expensive (consultants charge $ 20,000 to $ 25,000), it also brings another, even more expensive result legal risk. Including inappropriate topics, chapters and policies that are commonly found in company owned, chain operations manuals. If these are included, as they invariably are in franchise operations manuals and template operations manuals, very significant franchise liability issues arise.

FRANCHISE DISCLOSURE DOCUMENT AND REGISTATION

The fourth step in how to franchise is drafting a FDD Franchise Disclosure Document. Similar to a securities (stock offering) prospectus, this document should be written, start to finish, by a competent franchise lawyer. The FDD is then registered in those states that require a registration process. Drafting a balanced, fair FDD can save a trip to the courtroom later. Using online or boilerplate FDD template almost certainly means a visit to the courtroom in the near future. As these visits cost hundreds of thousands of dollars and up, they far outweigh the cost of doing it right to begin with.

FRANCHISE MANAGEMENT TRAINING

The fifth step in how to franchise is training the franchise management team in how to operate the new franchise company. When the fourth documentation stepends, momentum gathers with the start of the franchise marketing. This is where the sparks begin to fly as franchises are sold, the new franchise owners are taught and trained, and opening assistance is provided. Its also when most new franchise companies make serious mistakes that haunt them for years or even decades to come.

Resources are often wasted because the new company has not been schooled in the art of selling franchises. Or franchises are sold without carefully screening the would-be franchise owners. As the saying goes, one bad apple can ruin the entire barrel. Even in the best case scenario, marketing mistakes are costly. Some companies spend tens of thousands of dollars on inappropriate marketing and media choices.

Kevin B. Murphy, Mr. Franchise, is a franchise lawyer attorney in San Francisco with a 30-year practice devoted exclusively to franchise law. A franchise lawyer California, holds degrees in business administration and law from the University of San Francisco and an MBA from San Francisco State University.

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