What does it take and what are we looking for to turn your business into a franchise?
I recently spoke with Rick Robinson of Franchise Genesis on what we are looking for in business when they want to become a franchise.
Rick says there’s several key things that are important. First of all, we want their current business to be profitable. Second, we would like the business model to be a business in a box, to make it easy for franchisees to jump into. Thirdly, we’d like it to be the kind of business model that the customer base is pretty substantial, and they can be in most markets across the United States. That way it’s easy to find franchisees that would want to own a franchise in those markets. They will also need to be ready to make that shift of being a day-to-day business owner of their company location to training, coaching and mentoring new business partners, which are going to be their franchisees.
Rick also indicates one thing the business owners need to think about is, do you already have systems in place that are easily taught? Is my business model easy to teach someone how to do? And do I have the systems in place to help them follow this road to success? If they don’t, we help them put those in place. Many businesses, are thinking should I expand through franchising, as opposed to me having to open other locations myself and being so exposed out there. We help them analyze all of that, we go through a very lengthy due diligence process with them, strategic analysis, looking at their business, looking at the opportunities to expand them as a franchise model. And then we talk to them about what changes they would need to make, and how we would help them do that before they start marketing your franchise opportunity.
Rick, please walk us through; what is the process of converting a business into a franchise?
Franchising is regulated by the Federal Trade Commission, so you need to make sure that you are working with good professionals that understand all of the details and nuances of franchising your business, as well as the legal ramifications. There is a document called a federal Franchise Disclosure Document that has 23 sections to it, and every franchisor must answer all of the information to be put in there. It has to be done by a franchise attorney, that will then register it and qualify it to be with the Federal Trade Commission, so that you can offer franchises. Our process takes them through gathering all of that information that is needed and required in the FTD or Franchise Disclosure Document, and then working alongside our franchise attorneys to help get the legal documents done. The next step is that they need to have an operations manual in place. This is going to be the standard operating procedures. We help put that together and that’s going to be the standard operating procedures that the franchisee must use and run for their business. Now they’re a legal franchisor. They have the operations manual, the training in place. Now, how am I going to find good, qualified franchise candidates to purchase my franchises through? There are many ways to market your brand to try to find qualified franchisees. The easiest ones that don’t necessarily bring you the best qualified candidates are typical online marketing, pay per click paid social, organic. As a rule, only about 1% of those leads end up buying your franchise, it’s so easy for people to get on the internet, look around kick tires, they have no money, they’re not serious. Half of them you can never get in touch with you’re leaving voicemails and emails and text messages. The next 25% you do get in touch with but they don’t have any money. They’re not that serious. So it’s only that final 25%, maybe 25 out of 100 that are seriously looking for franchise opportunities and have some money, and they’re looking for something that would help them achieve their goals and their dreams of business ownership. It really limits the number of qualified candidates that you’re dealing with that just come in off the internet. Other resources would be the franchise broker networks that have consultants. There are several very good ones out there. We happen to have a sister company, the Franchise Consulting Company that we’re affiliated with, that has 150 of these consultant brokers out there. They are dedicated to finding good, qualified franchise candidates every day. What they do after consulting with the individual knowing their goals, their background, their budget, they will match up several very good franchise opportunities to them that are a good fit for them. That’s probably the best avenue for finding good, qualified franchise candidates. We also own a franchise Expo company. That’s one of our sister companies, the Great American Franchise Expo company. This is where you’re in a convention center, there might be 75 to 100 different franchisors representing their franchise opportunity. And the public comes in to learn about those opportunities. That’s a good way to gather good franchise candidates, you’re able to engage with them one on one right away and discuss what your opportunity is.
Greg Mohr is the Wall Street Journal Best Selling author of “Real Freedom, Why Franchises Are Worth Considering and How They Can Be Used For Building Wealth”, and has managed restaurants, been a micro-electric circuit engineer, owned and operated dry cleaners, storage units, rental properties, and franchises. Greg has helped hundreds of people invest in a few hundred franchise units. Greg is also the podcast host of the Franchise Maven Podcast. Contact Greg at 361-772-6401 or greg@franchisemaven.com