9 Steps To Successfully Franchising Your Business

Franchising is an exciting way to expand your business, while maintaining control of your brand and products. Drive and achieve your financial goals through careful attention to these 9 points.

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By Pieter Scholtz


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You're reading Entrepreneur South Africa, an international franchise of Entrepreneur Media.

ActionCOACH recently ranked in Entrepreneur magazine's Franchise 500®, the world's first, best and most comprehensive franchise ranking. Placement in the ranking is a highly sought-after honour in the franchise industry, and it is one of the company's most competitive rankings, as evidenced by the fact that Entrepreneur received more than 1 000 applications.

The ranking rewards recipients for outstanding performance in areas including unit growth, financial strength and stability, and brand power.

This accolade is testament to ActionCOACH's strength as a franchise business. Here are some key insights into the factors that need to be considered for successful franchising.

1. Proven Product and Systems

As franchising is all about leveraging products, services and systems, it is imperative that you ensure that your idea, products and systems have been thoroughly tested.

You cannot start franchising your business while still testing whether the product works or not, neither can you franchise your business until you are absolutely convinced that there is a need in the market for the product.

In addition, you need to be able to demonstrate that the business is able to operate profitably for a sustainable period prior to franchising your business. This is best done by first running a test model successfully.

2. Using Leverage to Grow your Footprint

Operating a successful business is one thing – being able to duplicate the business successfully is quite another.

Ensure that you have drafted a set of detailed operating manuals, brand guidelines and financial models that any potential franchisee is able to use from the start of the franchise being opened.

As your franchise expands, you start experiencing a certain loss of control and one area that you would want to have clear guidelines for is in the area of brand guidelines.

Failure to give attention to this element could very easily result in the dilution of your brand and/or proliferation of unauthorised brand logos and products and services.

3. Legal Agreements

Ensure that you appoint an attorney that understands franchising and that all Master Franchise and Franchise agreements have been properly drafted. In South Africa, you may want to consider consulting the Franchise Association of South Africa (FASA) to ensure that you have covered all the requirements for registering a franchise.

In addition, use the services of the above experts to draw up your Franchise Disclosure Document too.

If there are patents that have to be registered, make sure that these are handled and lodged by experts in the field.

4. Understanding the Key Numbers that Drive Growth

As your franchise starts to expand, you want to ensure that you have access to the key numbers (financial and non-financial) that will determine your success. Set up proper accounting systems and software that allow you to have access to the key numbers for each franchise operation.

Having access to these numbers will provide you with the opportunity to identify which of your franchise operations are performing well, and those that aren't. Timeous access to the correct information is critical to addressing non-performance and being in a position to coach the franchisee in the areas that they need support in.

5. Franchise Partner Support

One of the keys to successful franchising but which is often overlooked, is the support structures that need to be put in place to be able to rollout franchises at the pace that you are planning. Areas that need to be put into place are as follows:

  • Training and Post training support. Whilst the success of any franchisee will largely be dependent upon the initial training they receive, it's critical that the appropriate post training support and training structures are put in place. This is an area where the strength of the "community of franchisees" is built and as a result, one needs to look at regular support structures, i.e. weekly, monthly, quarterly and annually.
  • Refresher training. Whilst franchisees will receive initial training and post training support, it's recommended that you conduct annual refresher training to ensure that your team are kept abreast of any developments within your markets and or products.

6. Franchise Selection

The success of any business is built on the strength of the team that you surround it with. The same applies to franchising. Define what it is that you're looking for in a franchisee and communicate what you are looking for to all those involved in finding the best possible candidates.

Equally important is to define your franchise sales process. This should be designed to ensure that the process achieves two main goals:

  1. Put the prospect in a position to be able to make an informed decision about whether your opportunity is the best business opportunity for them
  2. Ensure that you are confident that the franchise prospect has what it takes to be successful in your business.

Often, corporate executives want to leave their highly pressurised corporate roles, and whilst being successful in those roles, they might not have the personality, drive and tenacity to be successful as an entrepreneur.

Although it's easier to succeed within a franchise model, it still takes hard work. If you want your franchise model to grow at the pace that the market requires, ensure that you select franchisees that are absolutely committed to their success, as well as your brands success.

7. Cashflow is King

Starting out in any business takes cash. There is a very well know quote that states – "at the start of your business, it takes twice as long and twice as much cash."

This is equally true for you as you start to rollout your franchise operations. The set-up costs relating to product development, developing systems, testing your concept store, brand development, developing franchise training manuals, legals, research and development, IT systems, as well as head office support structures, are require large amounts of cash.

As a result, it is critically important that you develop a proper cashflow model and budget and ensure that you track your actual expenses, versus planned expenses on a monthly basis so as to be able to take corrective action timeously.

8. Effective Branding

One of the key reasons that franchisees decide to join a franchise is because they lack the ability to do effective marketing and branding for themselves.

As a result, you need to develop a detailed marketing plan for the brand as a whole, at the same time as developing a marketing plan that any franchisee can use at the start of their franchise operation.

Head office responsibility is to drive brand and industry awareness of your franchise or product, and it's the responsibility of each franchisee to drive their local area marketing.

As the marketing environment is constantly evolving, it is the responsibility of the head office marketing team to ensure that the entire team is kept abreast of developments in this space.

9. Relationships X Results = Retention

The above equation is probably the most important one to work on when you start franchising your business. Franchise partners invest their capital in order to obtain a certain return on investment. It's important to keep focused on the numbers, and on developing solid relationships with your franchise partners to build strong retention with partners and clients.

Pieter Scholtz

Master Licensee

Pieter Scholtz is the Master Licensee for ActionCOACH South Africa. ActionCOACH is the world’s largest executive and business coaching company with operations in 41 countries. It is also on the list of the top 100 franchises globally. As a highly successful Business and Executive coach, Pieter is a master of teaching business owners how to turn their businesses around and accelerate their growth. Email him at pieterscholtz@actioncoach.com or phone 082 8813729.

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