Six steps to franchising your business

From choosing franchisees to providing specialist training, aspiring franchisors must ensure they follow all the right steps to make their operation a success. Here are some best practice tips to franchising a business.

Planning on franchising your business and looking for some ideas? If you have a proven business model that you think can be replicated across other locations, you could become a highly profitable franchisor.

Here are six steps to successfully franchising your business.

1. Choose excellent franchisees

Determine what kind of person you want to carry your brand forward as you expand your franchise business model and network. Consider whether your prospective franchisees should have any specialist experience, qualifications, or professional accreditations. It’s a good idea to create a detailed job specification that will list all the franchisees’ responsibilities and any key skills/attributes that will be required for the role.

Once you have a list of potential franchisees, you need to make sure they meet the financial requirements of the role and pass the relevant credit checks. Next, it’s time to conduct interviews, which will give you time to learn more about each candidate’s background and whether they’re the right fit for the franchise. You may also want to consider arranging practical assessments and on-the-spot training, so you can get a better idea of whether the person has the right skills for the job and an awareness of how to start a franchise.

2. Look for those willing to make a long-term commitment

Make sure your franchisees are happy to commit to the business for the duration of the franchise contract and that they understand they’ll be responsible for all its business operations. Ask the candidates what their long-term goals are and what they think they can bring to the network in terms of skills and experience.

An inexperienced franchisee may feel more comfortable and confident making a long-term commitment with a franchisor that has a professional accreditation. One way to achieve this is to become a member of the British Franchise Association (bfa), which promotes and accredits excellence in UK franchising. The association only allows franchisors to become members if they meet its strict accreditation criteria, which demonstrates to your prospective franchisees that you’re an ethical franchisor.

3. Select your locations carefully

If you’re planning to choose the franchise locations yourself, make sure you select a site where there’ll be enough footfall to make the franchise business model viable. For example, a restaurant franchise specialising in Italian cuisine will need to make sure there’s not too much direct competition in the local area from other Italian restaurants.

Many franchisors perform a comprehensive analysis of the local demographics to determine whether the new franchise will succeed in the area. Some will also provide franchises with exclusive territories, which are protected from encroachment by any other franchisee in the same network. This can make it easier for the franchisee to build and retain a large customer base over time.

4. Provide specialist training and support

All franchisors must understand that new franchisees may not have much (if any) experience of operating their own business. Therefore, to ensure your franchisees know how to start a franchise, you need to equip them with the skills and knowledge to make the right decisions and take your brand forward. This should include guidance on how to run the franchise, understand the target market, promote the brand’s products/services, and manage accounting, finance and any legal issues in the business.

Typically, the franchisor will provide a pre-training package, which will begin soon after the franchisee signs the contract and could include a training manual and setting up a business card. The main training could last from several days to several months, depending on the business, and will be followed by ongoing training as the franchisor continues to innovate its products and update its systems.

5. Charge an appropriate franchisee fee

When franchising your business, your franchise fee, otherwise known as royalties, needs to be high enough for you to cover your costs and generate some profit, but not too high that it deters highly skilled prospective franchisees from applying to your network. According to research by the bfa, the average franchisor fee is 11.7 per cent of total sales, so use this is a rough benchmark. However, franchisors may charge a higher fee for franchises that achieve very high sales, such as in busy urban locations.

6. Publish case studies of some of your franchisees

Publish testimonials and/or videos of your current franchisees illustrating how they built their businesses and benefitted from your training and support. This is a great way to inspire candidates that are looking for some motivation and have yet to learn how to start a franchise. Think of this as the perfect opportunity to demonstrate how your existing franchisees have transformed their lives and built thriving businesses under your brand name.

Case study: Rebecca Newenham of Get Ahead VA, discusses how she converted her virtual business support agency to a franchise model.

Rebecca Newenham

After a career in corporate buying for retail giants Superdrug and Sainsbury’s, I was looking for a more flexible employment solution. I saw the way the economic landscape was changing and an opportunity to provide flexible marketing and business support services to meet the growing needs of entrepreneurs and SMEs across the UK.

I first considered a franchise model in 2016. Until that point the business had been growing well, with new clients coming on board and new virtual assistants joining the team. The business had reached a point of critical mass, and I felt franchising was the next logical step to grow our regional presence. While as a team we have always been able to serve clients anywhere in the UK, I know that local, face-to-face relationships still make a massive difference.

Get Ahead VA suits franchising so well because it is service based, with no big investment in equipment required. It also suits people from a wide range of business backgrounds, with no specific technical skills required. What franchisees gain is a business which is quick and straightforward to set up, scalable at a pace to suit them and backed up with first class training and support. It’s the chance to go into business for yourself, but not by yourself.

To begin the franchising process, I firstly worked with a consultant to really hone our franchise offering, my contracts etc so everything was in place. I also designed a franchising prospectus and put information on our website.

“Think through exactly what you have to offer and use a franchising specialist for advice”

It was through that process that our first franchisee came on board. She was already one of our virtual assistants but was looking to grow her business and buying the franchise for her area was the perfect choice.

Our second and third franchisees have come from different avenues – one from the Mums Enterprise Roadshow that we exhibited at in Birmingham, and another through advertising on a franchising portal.

I haven’t focused on recruiting franchisees in particular locations; it is much more about finding the right person with the right skills and attitude to represent our brand.

Once recruited, training is vital, and I invest in both one on one training in our systems and services as well as external training on key networking tools such as LinkedIn to ensure our franchisees have everything they need to make their business a success. Mentoring them along the way is a hugely satisfying part of my role.

Advice for potential franchisors

If you intend to go down the franchisor route, make sure you think through carefully exactly what you have to offer and use a franchising specialist for advice. Although franchising seemed like a logical option for me, there were still plenty of things I hadn’t even considered in terms of budgeting for costs such as training, the amount of time required to recruit the right franchisees and some of the legal considerations.

While of course, you hope it will all go well, you need to be clear on your position if things don’t turn out as planned. Spending enough time to thoroughly research potential franchisees before signing the contract is vital. Although it can seem like wasted time if in the end their interest doesn’t convert into a contract, it is not worth the risk of damaging your brand and the business you have spent so many years building up.

Case study: Rik Hellewell, of cleaning business Ovenu, undertook a five-year pilot scheme in preparation for his switch to a franchise model. Here, he discusses how the process paid off. 

Rik Hellewell, of cleaning business Ovenu

Ovenu is an oven deep cleaning and valeting business. I started the company in 1994 after having previously worked in the carpet cleaning sector.

From the outset I had always wanted Ovenu to adopt the franchise model simply because previous experience with contractors wasn’t great and the margins were too tight to consider employees. The model works very well as it is can be replicated in any location – every property is a prospect!

“Construct a road map, calculate the costs and never go in under-funded”

In preparation for franchising the business I embarked on a five-year pilot scheme, which allowed me to produce ‘an idiot’s guide to…’ operation manual. During this process I was able to calculate workable territory numbers and conduct market research to get all relevant geographical and demographic data.

From there, I was able to define a good franchisee profile, advertise opportunities, recruit and prosper! Today, Ovenu operates over 100 franchise territories throughout the UK, and has franchises across the globe, including in New Zealand and Australia.

For potential franchisors, I would recommend constructing a road map to what you want to achieve, calculate the costs and never go in under-funded. Having a strong brand and ensuring your franchisees adhere to the company’s values and processes is another crucial factor to establishing a successful franchise.

Ben Lobel

Delphine Hintz

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

Leave a comment