Turning your small business into a franchise can be a profitable decision. It requires a business that is franchiseable. That is, it needs to be credible, run by experienced managers, a good business opportunity, teachable and capable of producing a high rate of return. According to the International Franchise Association, a successful franchise must generate between 15 and 20 percent profit on an investment after deducting franchise royalties. You will also need a franchise support program, an operations manual, a training program, control systems and forms and a supervisory program.

Things You Will Need

  • Support program
  • Operations manual
  • Training program
  • Control systems and forms
  • Supervisory program
  • Step 1

    Create a support program for your franchisees. You need to provide your customers with value if you expect them to pay for the privilege of using your business model and buying your products. Create a document that describes in detail what your franchise can do for them. These services vary from franchise to franchise. They could include providing marketing consulting, advertising, training, help with accounting, advice on choosing a site, and so on.

    Step 2

    Describe how to run the business an in an operations manual that also includes a brief history of the business, company policies, standards, advertising, health and safety rules, and proper use of trademarks.

    Step 3

    Design a training program. The training program must be structured; provide all the knowledge, management skills and even attitude required to make a success out of your business model. Set up a supervisory program. Supervisors are representatives of the franchise to the franchisees. They have experience and detailed know-how on how the business works and are ready to visit the franchisee and provide practical help whenever needed. At the beginning you could provide this service, and then hire successful managers to do it for you.

    Step 4

    Design control systems and forms. This could include cost of materials, labor, advertising and sales report forms.

    Step 5

    Create a franchise fee structure. Take into account the services you offer, the level of competition the franchisee will face, the finances of the franchisee and the value of your trademark to set a fee that will be profitable for you and affordable for your franchisees.

    Step 6

    Write a compelling franchise offering circular. This is a legal requirement enforced by the Federal Trade Commission. Provide all the information a potential buyer needs to decide if your business is a good opportunity for them.

    Step 7

    Market your franchise by advertising in relevant business fairs, trade associations, magazines and websites. Join your local chamber of commerce and other recognized organizations that can improve your credibility and standing in your industry.


    Tips & Warnings