I have received a number of calls recently about starting a franchise operation. On the one hand, it is awesome because the interest in franchising among Iowa business owners definitely seems to be growing. But on the other hand, most of these business owners are not ready to begin the leap into franchising just yet.
A lot of times a prospective franchisor might be getting a lot of encouragement from customers saying, “you should franchise!” While that’s wonderful often the prospective franchisor is operating only a single location, does not have adequate systems in place, and perhaps most importantly, lacks the investment capital to really make a franchise work.
The backbone of any successful franchise company is systems. You will need to create and completely document the systems that a franchisee will use to run their business successfully. You will need to create a training program that will teach a new franchisee what they need to know to become successful. You will also need to develop marketing plans that a new franchisee will use to obtain customers. And since you will now be in the “business of franchising” as opposed to your “former business”, you will also need to have systems that you can use to recruit new franchisees into your franchise company. There is a TON of work to do. You may be able to hire outside consultants to assist with all this work, but if you do, you are definitely going to pay significant dollars for that assistance.
Which brings me to the next point. You need considerable capital to get a franchise system off the ground. You will need to have a franchise disclosure document and franchise agreement written hopefully by an experienced franchise attorney. You will also need audited financial statements produced by an experienced accountant. You will need an operations manual that sets out your systems for a franchisee to run their business. All of this takes a significant investment on your part, and not only in terms of money, but also time.
It takes lots of time, effort and money to get a franchise off the ground. There are a great deal of other factors that I have not even mentioned in this blog post. It is just the tip of the iceberg. It is not something to take lightly. It can be a great model for business but it is usually for the business owner who already has experience in managing multiple locations with great systems in place and significant investment capital at their disposal.