When you visit your favorite fast-food restaurant or sit down eatery, there’s a chance that it might be a franchise location. A franchise is a business where the owner licenses its operations—along with its products, branding, and knowledge—in exchange for a franchise fee. The franchisor owns the trademarks and the business model. The franchisee is the person or corporation that owns and operates the business using the trade-mark and business model system licensed from the franchisor.
Many business owners opt into this form of business, and can possibly become wealthy. As of 2020, the national average income for a franchise owner in the United States ranged anywhere from $50,000 to $200,000+ per year. As a franchise owner, you have to choose the right business in the right industry, and it’s best to go in with previous entrepreneurial knowledge. For those interested in opening a franchise location, here six things to know.
1. Make sure you have your legal documents.
You’ll want to make sure that you have the necessary legal documents ready when opening a franchise location. You don’t want to leave yourself open to possibly being sued, so make sure all parts of your business are covered with the right paperwork. First, you’ll begin with creating the franchise disclosure document.
This document includes everything to a prospective franchisee everything they need to know about your company. This can include, information about you (the franchisor or franchise owner), information about the company officers/owners and their background, prior bankruptcies, lawsuits or criminal issues, company financials, company’s number of open and closed franchises, responsibilities of the franchisee, responsibilities of the franchisor, franchising fees (initial investment, royalty payment, etc.), and the detailed training provided by the franchisor.
For any business person familiar with beginning their own company, the franchise disclosure document sounds a lot like a business plan. A business plan is a formal written document that contains business goals. It also includes the methods of how these goals can be attained and the time frame within which these goals need to be achieved. A business plan is like the foundation for your company, which is the house in which you’ll reside. Without this foundation, your business will fall apart.
Another document which you’ll need will be a loan application from a business that offers franchise revenue loans. These lenders are specifically situated to help new franchisors who are hoping to get their business off the ground. Once the lender establishes that you are worth lending to, you can then use the business loan to build your franchise. Finishing any and all legal paperwork for this lender is important.
2. Create a strong training process.
Your employees are going to be the first thing that your customers will see every day when they come into your location. You want to ensure that they are trained on the ins and outs of your business so that your restaurant can run smoothly. In a world where word of mouth travels fast, in person, and across the internet, having employees who know what they are doing is extremely important.
You need to have a solid training process in place to better your employee’s preparedness. Give them a guide book that can teach them proper food preparation, good customer service skills, and even how to contact the water delivery service Montreal for re-orders of bottled water. You can also provide the same guide to future franchise locations, adding on as the year progresses. If you provide the best direction possible in a training guide, your employees will be better prepared once your franchise opens.
3. Define the brand for your franchise.
If your franchise looks like every other cookie-cutter restaurant franchise out there, you might as well quit while you’re ahead. You need to stand out so that you don’t get lost in a sea of other brands. What you’ll want to do is have this same brand name experience spread over countless franchises that you’ll own. Keep the experience of coming to your franchise the same for all customers, no matter what part of the United States they might be in.
You’ll want to choose a color palette that speaks to your brand, which all of your locations will conform to. Have employees at each place wearing the same style uniform, and make sure each location is following the same protocols as each other. No place should be set apart when it comes to following the brand tenets of your franchise.
Protect your brand as much as possible. Make your business name and logo unique and global. Your goal is to broaden the reach to everyone, so those profits can continue to grow. Don’t use those names which are only focused on a local audience. After you seek out a federal trademark for protecting your brand, look into teaming with groups like the Brander Group to ensure that your online presence is sound with the brand which you are attempting to build.
4. Hire the best franchisee managers and supervisors.
Just like hiring the best employees to be at the forefront of the franchise that you’re building, make sure you have the best option for managers and supervisors. These individuals will be the people who will be at your location day in and day out. While you are running the franchise as its owner, they will be your front line at your restaurants.
You want managers that will be excited about your brand. You want people who care about the franchise and want to do their best to help it to succeed. It’s best to try and find those people who have experience as managers or supervisors in fast food services.
5. Set benchmarks for your franchise.
You’ll want to build steppingstones with which to grow your franchise. Find ways to measure your successes and failures. When you do this, you can build benchmarks that you can train your employees to reach. Your goal here is to manage and maintain quality control. No business is perfect. Just like people, companies have their faults.
The mark of a great franchise is whether they are able to learn from both their successes and failures and grow from both. You set benchmarks in sales, employee performance, staff attendance, and even customer service. Reaching and outperforming these target goals can go a long way in building your franchise successfully. Simply hiring people who care about your business can help you out in the long run.
6. Figure out your endgame.
Try to determine what you want out of the franchise experience. Are you hoping to hit it big by just establishing one location? Would you rather consider opening many different franchises across your state? Do you plan on leaving the franchise to your children? Is it your hope to sell the franchise to someone else?
It’s best to figure out what your endgame is so that you’ll know what will be the correct franchise opportunity to seek out. You need to know what you’re getting into, whom you’re getting into it with, and how to eventually get out. Your life becomes that much easier when you figure out a complete plan. With a decision as major as this, you don’t want to play it by ear.