For those about to enter the world of franchising, the leap may seem daunting. After all, you are about to enter into an entirely new business--the business of selling and servicing franchises. And, just like the franchisees you are hoping to sell to, you will be going in blind--not knowing what you do not know.
But not to worry. Just as your future franchisees can turn to you for advice on how to run their new businesses, there is a cadre of experts who can help you with the various aspects of becoming a franchisor.
The First Steps Toward Franchising
The first advisor you may want to consider hiring is the franchise consultant. Franchise consultants (such as this author) can play a vital role both in your decision to franchise and in your ultimate franchise plan.
The first and most important role of the franchise consultant should be to provide you with objective advice about the franchisability of your business, an assessment of whether franchising is the best option for you in particular and an understanding of the process (and all the costs) involved in franchising--so you can make an informed decision on whether franchising, in fact, makes sense for you. As with virtually all your advisors, you will not be charged for your first meeting and this initial analysis.
Should you decide to franchise, good franchise consultants will be able to help you with a wide array of your initial franchise needs, ranging from the development of your strategic plan, quality control tools and marketing strategies and materials.
Strategic planning is perhaps the most important role of the consultant. Many of the key decisions you make in the early going--territory, support, royalties and fees--will have a profound impact on the long-term health of your franchise organization. To get you the best answers to these questions, franchise consultants will complete competitive analysis, examine industry best practices, develop structural and staffing recommendations and subject all your decisions to sophisticated financial analysis. Bear in mind that a 1 percent error in your royalty structure can easily translate to millions of dollars of lost profits, so these are not decisions you should take lightly.
Another key to successful franchising involves quality control. A well-rounded consultant will be able to help you develop the tools necessary to maintain the brand: operations manuals, site selection manuals, field consultant manuals, training programs and even training videos should be a part of your quality control arsenal, and the more aggressively you are growing, the more of these tools you will likely need.
Of course, you cannot be a franchisor without selling franchises. That means your consultant should be able to advise you as to the best methods for generating franchise sales leads. Some consultants will also be able to offer their expertise in implementing your franchise marketing--developing marketing plans, brochures, internet sites and videos on your behalf. Again, the difference of just one incremental franchise sale will likely mean hundreds of thousands of dollars over the years, so if your consultant can help you sell more aggressively (or keep you out of trouble in the process), it is money well spent.
In evaluating potential franchise consultants, you should look for two things: integrity and expertise. Be very cautious of any consultant who says you should franchise before thoroughly evaluating your business, your goals and your resources. Franchising is not right for everybody, and those who would tell you that it is may be more concerned with their own welfare than yours.
In evaluating any potential advisor, be sure you understand the qualifications of every individual who will be working on your account. If you are a startup franchisor, you are well advised to work with people who have built businesses from the ground up. Many franchise consultants may have spent their entire careers working in large franchise organizations, which might be a great match for larger franchisors, but a poor match for the new franchisor. And don't rely on client lists alone--if you are working with a rookie employed by an experienced firm, you are still working with a rookie. Be sure you examine each individual consultant's bio.
You should also look for breadth of expertise. The franchise consultant will be providing you with advice on a wide array of issues. The more brains the firm has to put on your engagement, with the more areas of expertise, the more value you will get. While sole practitioners may have a good deal of experience, if you go that direction, be careful to work with someone who is committed to consulting as a career, not someone filling time between jobs.