Franchise your business worksheet

Follow these eight steps to successfully franchise your business.

Step 1: Evaluate if your business is ready
Is your business ready to be franchised? Answer these three questions to determine
if it is.
What is your concept?
Your concept must appeal to both end consumers and prospective franchisees. More units must create economies of scale and increase profits, otherwise the concept doesn’t suit franchising. The business also needs to be something you can systematise and replicate, and it shouldn’t require your personal touch to be successful. / Describe your concept:
Check your financials.
Prove your concept with a few profitable units before you try franchising.
/ Evaluate your financials:
Gather market research.
Don’t rely on a gut feeling that your business will be a hit. Market research must confirm that there is widespread consumer demand and room in the marketplace for a new competitor.
/ Describe your market:
Prepare for change.
Becoming a franchisor means you’ll be engaged in entirely different activities than you were as a business owner. You’re no longer an ‘operator’, you’re a support system. Are you comfortable being a teacher and salesperson, selling and supporting franchisees? / Are you ready to become a franchisor who no longer works directly within the business you created?
Evaluate other alternatives.
Have you evaluated other potential growth opportunities?
Step 2: Learn the legal requirements
Although franchising is not a regulated industry in South Africa, it is subject to the Consumer Protection Act.
Are you aware how the Consumer Protection Act impacts franchising? / Answer here:
Have you researched franchising best practice?
Have you approached a legal professional to assist you creating your disclosure document?
Step 3: Get expert advice and test your concept
Before you can sell your concept, you need to make sure it works and it can be replicated. Franchising is not the same as running an independent business, so get an expert to help you.
Have you opened a second store? / Answer here:
How has the system replicated?
What issues have you encountered?
What areas have you earmarked for additional stores?
Have you made contact with the big banks to discuss your concept and if they will support your franchisees?
What key recommendations have franchising consultants offered you?
Step 4: Make important decisions about your model
In conjunction with preparing your paperwork, you need to make key decisions about how you’ll operate as a franchisor.
These include:
The franchise fee and royalty percentage: / Answer here:
Terms of your franchise agreement:
Territory sizes awarded to each franchisee:
Geographic areas offered to franchisees:
The type and length of training programmes on offer:
Must franchisees buy products or equipment from your company:
What will qualify franchisees in terms of business experience and net worth:
How you will market to franchisees:
Do you want an owner/operator for each unit or master franchisees who will develop multiple units:
Step 5: Create your paperwork
Ask a professional franchising consultant for assistance. You need a franchise disclosure document (mentioned in step two) as well as a training and operations manual.
Have you determined what your systems will be? / Answer here:
Have you set firm operational standards and guidelines in place?
Have you determined how your franchisees and their employees will be trained?
Step 6: Make key hires
Franchising a business requires staff members who can focus solely on helping franchisees.
What positions do you need to fill? / Answer here:
Will you have regional head office members or national members?
Who will train franchisees?
What skills are you looking for?
How big will your team be, and what are your growth plans as you sell more franchises?
Step 7: Sell franchises
Once you’ve set yourself up as a franchisor, you will need to convince potential franchisees to buy your concept.
Why should the prospect want to invest in your concept” / Answer here:
How are you offering security?
What makes your offering a good return on investment?
What rules have you created that make this a good franchising system?
Step 8: Support franchisees
As a franchisor, it’s your training programmes and other support efforts that will create quality control and ultimately make sure if the brand provides a uniform experience.
Are you regularly speaking to your franchisees? / Answer here:
Do you understand what is and isn’t working in their stores?
Can your franchisees speak to you directly if there’s a problem?
Does head office consistently perform quality control checks at each and every franchise unit?

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