If you run a successful company, you may want to open stores in multiple locations to expand it. And the easiest way to do so without greater investment lies in franchising your business.

Want to learn how to make your own franchise business model?

You’re in the right place.

In this article, we’ll answer all your questions about business franchising including how it can help you grow your brand, how much it will cost, and how to get started.

Read on to find out more.

Things to Consider Before Franchising Your Business

Opening your own franchise business can be a lucrative option for those who are running a successful company. If you have valuable products or services to offer, you might consider franchising to reach a wider audience.

Franchising can allow you to attract and convert new customers and earn higher profits. You can also strengthen your brand’s presence without investing in opening new stores yourself.

Before you start your own franchise, you should:

  • Do your homework to familiarize yourself with the world of franchising.
  • Validate your franchise business idea. Is your product or service popular? Will consumers in other locations appreciate it?
  • Evaluate feasibility. Is it possible for you to successfully duplicate your business in a second location?

You should not think of franchise opportunities until you have your business up and running profitably at a second location. That’s something franchise consultants advise business owners.

  • Conduct market research to find out whether other business owners are likely to be interested in becoming a franchisee of your company.
  • Understand the legal requirements and fees of turning an independent business into a franchise.

As a franchisor, you will need to create a franchise agreement, a franchise disclosure document (FDD), and also pay franchise fees. The legal formalities are important to ensure that you and your prospective franchisees are on the same page.

  • Be prepared to market your franchise, attract franchisees, and guide them to efficiently run a business under your brand name.

You can also discuss the idea with an experienced franchise consultant. They may tell you whether franchising is the right thing for your company. If it is, a franchise consultant can also guide you to start your franchising business the right way.

Your Step-by-Step Guide to Start a Successful Franchise Business

Franchising is a legal business model that allows business owners like you to expand and achieve multi-unit growth.

By franchising your business, you’ll be able to sell your company franchises to individuals (called “franchisees”) who will open up their own franchised stores under your brand name.

Here is everything you need to get started as a franchisor:

Step #1: Evaluate If Your Company is Ready to Turn Into a Franchise

As a business owner who wants to make money franchising, you should evaluate if your business is profitable. You need to conduct market research to determine whether or not your end consumers and potential franchisees like your franchise.

At the same time, you should be able to systematize and replicate your business. Your business shouldn’t need your personal touch to be successful. Otherwise, there is no point in having franchisees run stores that don’t offer the same quality service.

Last but not least, you should prepare yourself to become a franchisor.

As a franchisor, you will have to focus on selling franchises and supporting franchisees instead of selling your product or service. You will not be going out there and doing it yourself.

Franchising your business means that you will have to give up the control you had over your business. However, you will still have control over how you want the franchisees to execute your business.

Step #2: Create a Solid Franchise Model for Your Business

When turning your company into a franchise, you need to make a lot of important decisions about your franchise model.

You should determine:

  • The term of your franchise agreement
  • Your franchise fee and royalty percentage
  • The states in which you’re willing to sell franchises
  • The total experience potential franchisees need to have
  • The type and length of training program you’ll organize for franchisees
  • The marketing strategy to promote your franchises

The information covered in your franchise model will govern how you’ll operate the business as a franchisor. Ensure that you start the right way.

Unsure about how to finalize these details?

You can hire a competent franchise consultant to help you make these important decisions for your business.

You will need to include this information in your franchise agreement. We’ll tell you more about the legal document in the next step of starting your franchising business.

Step #3: Complete the Legal Requirements of Creating a Franchise

If you want to legally sell franchises in the United States, your business needs to fulfill a few legal requirements.

Make sure that your business is in compliance with the franchise laws, which are a combination of federal and state laws. Franchise laws govern the registration, sale of franchises, and the legal relationship between franchisors and franchisees.

As a new franchisor, you will have to register a new franchise entity such as an LLC named, “ABC Franchising LLC.” You’ll also need to open a bank account for your franchise business.

You need to file a franchise disclosure document (FDD) with the FTC (Federal Trade Commission). It is a lengthy document that includes information your potential franchisees may need to know about your company, your sales figures, and more.

The FTC files your franchise disclosure document but you need to wait for the state to approve your application. The authorities might ask you to add more disclosures to the FDD before they approve your application.

Franchise consultants recommend that you update the FDD every year. You can also hire a competent franchise consultant or a lawyer to help you with this.

As a franchisor, you need to create a franchise agreement to make sure that you and your franchisees are on the same page. This document will help you set guidelines for all of your franchisees and help protect the actual essence of your brand.

Step #4: Build a Team to Grow Your Franchise

You should hire a few experienced professionals to empower your franchise, such as:

  • A trainer to help potential franchisees understand your brand and learn to conduct business under your brand name
  • A franchise process manager to help new franchisees use the company software and systems 
  • A franchise consultant to answer franchisee questions and resolve their problems
  • A marketing team to promote your franchise business effectively and attract new franchisees from multiple states
  • A franchise lawyer to help with legal requirements

Step #5: Sell Franchises & Support Your Franchisees

As a franchisor, your greatest responsibility is to find reliable franchisees and make them buy your franchise.

To do this, you need a robust franchise marketing strategy in place. You can buy the services of independent franchise marketing firms or hire an in-house marketing team. You should also visit franchise fairs to look for franchise opportunities.

Just selling franchises is not enough.

You also need to support your franchisees to keep the franchising business up and running profitably. Many franchisors offer regular training sessions and focus on the development of their franchises across states.

Are You Ready to Open Your Own Franchise Business?

Opening a franchise business is a big decision.

Before considering franchising, you should make sure that your company is actually ready for it. You need to evaluate the demand for your product or service, the feasibility of duplicating your business model, and the availability of prospective franchisees.

Once your company is ready for franchising, make sure that you follow this step-by-step process to get started as a franchisor. It is important for you and your franchisees to adhere to the franchise laws at all times.

You may also hire a franchise consultant to seek advice and help handling the legal requirements of running a franchise.

Do you have other questions about franchising? Do you need help starting and registering your franchise business? Feel free to connect with our business formation experts for guidance.