The good news is that you’ve already completed the first step to setting up a burger franchise. You have established a prototype operation and, even better, you have expanded your operation to include a second successful unit with your second stall. Now that you’ve accomplished this initial growth and success you’d like to grow your brand to additional outlets and you’re thinking that franchising might be the key to doing so. At this point you need to gather some more information about the work and costs involved and the legal challenges that you’ll encounter if you want to franchise your business.
Franchising is a highly regulated industry. On a national level, the FTC requires all franchisee companies to create a disclosure document called a FDD prior to being able to offer franchises to anyone. In addition, a number of states also have regulations and requirements that must be met before you can start offering franchises. Your first stop should be to have an initial conversation with an experienced franchise attorney who can tell you all about the initial legal requirements you’ll have to meet and the approximate cost to complete these requirements. As a general rule, don’t be surprised if you hear that the cost of this step alone will exceed $50,000 or more. Such an initial consultation is typically done at no charge to you.
The next step is to consult with a company, such as the ifranchisegroup, that specializes in helping people with a good concept evaluate whether or not it is practical for them to start a franchise operation. They will help you evaluate whether the business will lend itself to standardization in terms of operations and product quality, whether the business concept is profitable enough to justify the fees a franchise will require of potential investors, and what you will have to spend to create the infrastructure to train and support new franchisees -- from training videos to manuals to support staff. Don’t be surprised if you hear that this step could easily run into six figures. This type of initial consultation is also typically done at no charge to you.
After you’ve gathered this initial information you’ll be in a much better position to decide whether or not franchising is the right growth strategy for you. It isn’t for everyone but can be fantastic when it fits. Good luck on your future endeavors!
Jeff Elgin has almost 20 years of experience franchising, both as a franchisee and a senior franchise company executive. He's currently the CEO of FranChoice Inc., a company that provides free consulting to consumers looking for a franchise that best meets their needs.