How to Franchise a Business and How Much Does it Cost? (2021)

So you have a business and think it would make a good franchise. What exactly do you need to do and how much does it cost?

Most people look at franchises like Subway or McDonald’s with tens of thousands of locations and think they could be the next mega brand. The reality is most franchise companies, almost 70%, never grow beyond 5 units. Some franchises take off, most dont. You can save a lot of money and time by doing some research first before you franchise your business idea. There are a few things you need to determine to see if your business is a fit for the franchise model.

1. Is your business replicable with proven systems in place? Just having an idea or unproven system will make it very hard to sell to potential franchisees. Buyers want proven systems, that’s the point of buying a franchise. Why would anyone pay you royalties and a franchise fee just to test your idea.
2. Can your business be easily learned by franchisees? Training owners to smile and scoop ice cream is easy, complex technical businesses may not translate well into franchising, although it has been done.
3. Has the business proven to be profitable? Again, if you havent proven the model yourself it will be hard to sell.
4. Is the business unique and does it provide advantages over other franchises? I come across so many food places that want to be the next Subway, but cant even communicate their market differentiator. You need to know why people will want to go to your franchise vs the competition. That could include better prices, healthier food, trendier vibe, faster delivery whatever. But you need a unique market position, and you need to know what that is.
5. Are you capable of onboarding and supporting franchisees? Selling the franchise is one thing. What happens when you onboard a new franchisee. or 10 new franchisees. How will you train and support them? What if you are in California and your new franchisee is in Florida? A lot of time will go into franchisee training and support, and remember if you have a failed franchisee you have to disclose that by law to new franchisees, so it is critical your first franchises succeed or you will have to explain the failures to every new franchisee.
6. Can the business name and trademarks be federally registered? Some names may be taken in other countries or states which will present problems down the line.
7. Do you have capital available for registrations, marketing and ongoing operations?

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