If You Build It
Ready to franchise your business? Here’s a step-by-step guide you can use to get started.
"If you build it, he will come."
It's a quote from Field of Dreams, one of my favorite inspirational movies of all time. The movie is fictional, but the message is timeless; build something worth having and people will flock to it.
And that’s what this article is about.
Building a franchise program the right way – something worth having – so you can be successful selling franchises.
Filters and Amplifiers
Filters and Amplifiers are the litmus test we apply when designing and creating franchise offerings or turning around stalled concepts.
A Filter is anything that reduces a person’s interest or desire in a product, raise objections or cause someone to distrust. Amplifiers increase interest or desire and make them want to take the next step in the buying process.
Filters hurt you. Amplifiers help you.
Once you understand the concept, it’s easy to evaluate everything you write, say or design as either a Filter or Amplifier.
Try it yourself! It works.
Here are the steps:
Step 1 - Business Entity
You should form a business entity separate from your existing concept business(s) or prototype; Corporation, LLC, Partnership, etc.
The new entity will typically own the trademarks, franchise agreements, intellectual property and other assets of the franchise company, and will sell franchises and support the franchisees and franchise system. Check with your CPA or attorney as to the best type of legal entity to use.
Keep in mind that when you start a franchise company, you are starting a separate, full-time business in an entirely different industry, one that will take a lot of time and effort to learn.
You should either get someone to run the concept business so you can make a full commitment to learning this new industry and running the franchise company, or better yet, find someone from the franchise industry to run the franchise company for you.
Why? The learning curve, especially when it comes to franchise sales, is pretty steep.
To learn more about trying to do it all yourself when first starting out, read the article; “FSBO – For Sale by Owner.”
Step 2 - Registered Trademark
Trademarks represent the brand and are one of the most important elements of any franchise offering.
They are included in the Franchise Disclosure Document (FDD below) and necessary for the goods and services your franchisees are providing to the public. You are licensing the right to use your trademark (and intellectual property) to your franchisees in exchange for paying royalties.
If it is a new trademark (less than about five years), you will have to warn franchisees in the disclosure document (FDD) that the mark is not incontestable.
In other words, if someone makes a successful claim against the mark, you and your franchisees may have to stop using it. That is one of the reasons it is so important to get the trademark registration process started as soon as possible.
You can file the registration yourself, but I recommend that you hire a trademark attorney to do a detailed word and design search (for similar marks) to make sure you are in the right class(es) of goods and services.
Step 3 - Confidential Operating Manual
A successful franchise is one that can be consistently duplicated and operated in different locations.
I can’t stress enough the importance of a complete, good-looking, well-written Operating Manual. It is the best way to maintain product and service standards, promote overall uniformity and consistency in your franchise program, and to make sure that your franchisees understand what is required of them.
A well-written and comprehensive Operating Manual is a sales Amplifier, plus they make excellent training tools.
Potential franchisees will ask current franchisees about it, and will usually ask to view parts of it before purchase (in a controlled setting such as Discovery Day).
You can use it as a pre-training tool by requiring new franchisees read the Manual (and take a written test) before they come in for practical training, making on-site training much more productive and less time-consuming.
The table of contents and number of pages will be disclosed in the Franchise Disclosure Document (FDD), and it will be referenced in and become a part of the Franchise Agreement. You can update it as your franchise program grows and evolves.
All successful franchise programs have a proven and documented system of operation, detailed in a well-written Operating Manual.
Think of the Operating Manual as the foundation of your franchise program.
Step 4 - Training Program
Training Program materials will typically include (or be) the Operating Manual. If you have an informal training program in place now, you can use it as a starting point for both the franchise format Training Program and Operating Manual above.
An outline of the Training Program must be disclosed in the Franchise Disclosure Document (FDD below) including the number of days, the number of hours devoted to subjects, classroom and on the job training.
All successful franchise programs have one thing in common; world-class training. And you should shoot for that, too.
World-class training produces the best franchisees, who will be fully prepared to represent and protect your brand and trademarks, and help you sell franchises. One of the top questions potential franchisees ask existing franchisees is about the quality of the training program.
And don’t forget to test.
There isn’t any other way of knowing if you are doing a good job teaching, and the franchisees are learning. Short written or practical tests each day work very well when combined with a pre-training test or final exam.
Step 5 - Franchise Disclosure Document (FDD)
By the time you get to the FDD, you will probably be ready to go, anxious to start selling and making money - and tempted to shortcut this step.
But the time, effort and yes - money you spend to get the legal documents right will pay huge dividends down the road. Your franchise sales life will be much easier, and you will sell more franchises and make more money.
To learn more about the Franchise Disclosure Document with suggestions you can use to design a sales-friendly FDD appropriate for a startup franchise concept, read the article; “The FDD - One Size Never Fits All."
Step 6 - Website
Today’s buyer will almost always decide whether to move forward - or not - based on the content of your site. “You never get a second chance to make a first impression” really applies here.
And, the better your site, the better your close rate. Direct website inquiries (as opposed to a franchise portal or other advertisement) are usually the very best, most qualified prospects.
To learn more about how important your website is to franchise sales, read the article; "Hello, My Name is Susan..."
Step 7 - Prospect Qualification & Franchise Sales
I highly recommend that you set up a system (we offer this service - see Prospect Qualification) for responding to and managing franchise inquiries (leads). Prospect Qualification isn’t selling. It is simply a uniform and consistent process that evolves as you learn more.
The most wanted response from Prospect Qualification is to connect qualified prospects with you or someone in franchise development.
Other than a short email auto-responder letting the prospect know you received the request for more information, I recommend that you make every other contact personal. A real person with a real return address should send emails, and phone calls should come from someone who answers their own phone.
The goal is to let your prospect know you are interested in them without bugging them. If they are interested in you, be sure to give them enough time - and enough space - to let you know.
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If you would like to learn more about how we can help you with your franchise program, or just have a question looking for a straight answer, give me a call at 321.392.3000 Ext 1, or use the Contact Form to set up a call.