Chain Reaction

Is your business ready for franchising?

By Lori Francisco

Opinions expressed by Entrepreneur contributors are their own.

Business Start-Ups magazine, May 1999

Q: What's the first thing you need to do to expand your business and make it available for franchising?

A: First, make sure your business can be franchised. Does it provide an adequate return on investment to franchisees? Can it be replicated? Does it have a competitive edge? "It's not enough to be profitable," says Donald Boroian, CEO of Francorp Inc., a management consulting firm that specializes in franchise development, and author of The Franchise Advantage (National Best Sellers, $30, 800-FRANCHISE). "In order to justify franchising, you must have accounting, marketing and operational elements in place."

Once you've made the decision to franchise, develop a strategic plan. According to Mark Siebert, president of Siebert & Associates in Homewood, Illinois, you should figure out whom you're going to hire and when, how much you'll pay them, and what levels of service and support you'll provide to franchisees so you can determine your costs.

Under federal franchise law, you need a franchise agreement and a Uniform Franchise Offering Circular (UFOC). In addition, 13 states have franchise regulations that require filing or registering with the state. You also need to put together operations manuals and marketing materials for franchisees that detail every aspect of operations, including technology, management, financial issues and marketing. Because franchising is complex, have an attorney experienced in franchise law assist you.

Here are some resources to help you:

  • Siebert & Associates is a franchise consulting firm that can be contacted at (708) 957-8875.
  • Francorp's consultants provide development programs, including feasibility studies, legal documents, operations manuals and marketing materials. You can obtain a free information booklet by calling (800) FRANCHISE.

Contact Sources

Francorp Inc., 20200 Governors Dr., Olympia Fields, IL 60461, (800) FRANCHISE

Siebert & Associates, mcsiebert@aol.com

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