Turning Your Business Into a Franchise? 5 Tips Before You Start

Growth is often the goal for small businesses, so it’s an exciting milestone to decide to franchise your business. 

Franchising is a specific business model that’s regulated by the Federal Trade Commission. As a franchisor, the business owner has heavy-handed control over the brand and operations at franchise locations. Franchisees are independent owners who pay the franchisor to use their trademark, sell their goods or services, and receive assistance in operations.  

Before jumping to franchise, it’s worth considering all the options to scale your company, such as licensing your brand, opening a second location or creating chain stores that you run. If you’ve weighed the options and are ready to become a first-time franchisor, we’ve got five tips to help you get off to a smooth start.

1. Stay on the right side of the law

The FTC’s Franchise Rule outlines expectations for franchisors. It gets into the nitty gritty, like spelling out what your franchise disclosure document should look like and include, page by page. The FTC is very particular, so it’s important you comply with the law.

When the government’s involved, we recommend consulting with a legal professional. An attorney who specializes in franchise legal services can make sure you stay on the right side of the law when setting up your franchise, communicating with prospective franchisees and filing required paperwork.

2. Plan your costs before you start

As the franchisor, you’ll be collecting fees from your franchisees. But those profits require some real investments of time and money from you. You’ll have attorneys to pay, systems to create, websites to maintain and marketing to produce.

Take the time to meet with your accountant to plan for expected costs. You’ll want to work on a strategy for creating and maintaining a reserve to address unexpected costs that arise throughout the year. If you need a hand getting started, this is right in our wheelhouse at Certum Solutions.

3. Streamline your business processes

In running your own business, you may have developed processes to track sales, invoice customers and keep the books in ways that work for you. Bringing in franchisees means making sure those processes are sound and scalable to others.

If you’re using your own ~unique~ system of spreadsheets, emails, software and Post-It notes to handle your accounting, it’s time to streamline. As financial process nerds, we’d love to learn your system (no judgment!) and turn it into a beautiful, simple, automated process that you can easily scale to franchise owners. After all, it’s easier to start everyone with one streamlined process than to try fixing a broken system later on.

4. Create a repository for shared resources

When sharing your trademark and business concept with others, you want to be sure everyone has easy access to the resources and information they need to stay on brand.

Start by documenting everything about your business: your company culture, your values, your brand voice, your processes, your policies and your standard operating procedures. Even if you can personally train franchisees in the beginning, it may become unsustainable in the long run. Regardless, you want to be sure everyone has access to the same set of materials to stay on the same page. 

Your database for sharing that information doesn’t have to be complicated. Consider using options like Google Workspace, Dropbox or a password-protected website. Be as thorough, clear and well-organized as possible, so that it’s easy for franchisees to stay on brand.

5. Be willing to ensure day-to-day compliance

You can spend a week training and share a complete repository of resources, yet still have a franchise operating outside the guidelines you set for operations. 

For example, “We put customers first” may be one of your business values. To demonstrate that value, your business’ policy is to give customers a friendly greeting within 10 seconds of their arrival. If employees at one franchise location won’t engage with customers, it reflects poorly on the overall brand. As the franchisor, you’ll need to commit the time, energy and resources into ensuring compliance with your policies.

How Certum Solutions Can Help Set Your Franchise up for Success

We love numbers and processes here at Certum. If you’re ready to franchise, we’d love to give you a hand with streamlining your financial reporting, cleaning up your books and setting up systems that can easily scale for franchises. Set up some time to chat, or email us with questions. We can’t wait to see how you grow!