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Considerations for Turning a Business into a Franchise

For those who decide to expand their business through franchising, one of the bigger obstacles is the added cost and the level of funding required before franchisees enter the system. Anyone who is considering growing their business through franchising should give full consideration to the following cost items:


a) The Pilot Operation

The franchisor must have operated a successful test unit before franchising the business. Funds will be required to experiement with processes that will eventually be duplicated.


b) The Operating Manual

The operating manual is a large component in how the business' processes are duplicated from unit to unit. A thoroughly prepared operating manual must be written before franchising commences. This will certainly involve a considerable period of time and may also require an input from a consultant and/or other(s) with appropriate expertise.


c) The Franchise Agreement
While the franchisor will set out the terms of the franchise agreement, a lawyer must be retained to fine tune it and ensure it as a proper legal contract.


d) Promotional Material

The writing, design and printing of a range of good quality promotional material for the franchise offering to prospective franchisees must be funded.


More than all the above, perhaps, is the quantity of management time that must be dedicated to the development of the franchise concept. Apart from the franchisor's own time, additional management resources and a strong team will be required to provide back-up and support for the franchisee network.

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