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Turning a business into a franchise can be an effective way to achieve business growth if your company is successful. Rather than setting up new outlets and managing them yourself, you help franchisees to set up their own business using the blueprint of your existing business.

The franchisee obtains their own finance to set up the business and manage it themselves, but pay you a fee for the right to use your business model, brand and continued advice. Some of the largest and most familiar companies in the world have become successful using this method.

The most typical form of franchising is business format franchising, where you provide a licensed business package for a franchisee which they use to run their own business using your trading name and methods. You provide an operations manual for the franchisee, which details how to run and set up a new outlet. A contract for both parties is essential to establish the rights and obligations you have to each other. For instance, the contract may outline the support you will provide, like marketing or additional training. Support and training are usually provided by the franchisor, which may include regular meetings with other franchisees or help with the negotiation of purchasing contracts.

Other franchise methods include the sale of a licence which gives permission for someone else to manufacture and sell your product without using your business model. You may decide to franchise to an agent who sells your products on your behalf. A distribution agreement is another option, where you will sell your products to another business, which will go on to sell them to their customers.

Before considering turning your business into a franchise you should look carefully at whether this option is right for you. The business has to be successful before any consideration can be given to franchising, as you won’t find anyone who is willing to buy a franchise that isn’t profitable. The business also has to be easy to replicate in various locations by franchisees. Franchisees will be looking for something that makes it worthwhile paying you for a franchise, rather than setting up their own business. This may the established brand name or perhaps ongoing training and support which an individual may find welcoming, especially if they are new to owning their own business.

Although there is a huge amount of work involved with a franchise, like marketing, support and training and time, it is a viable option for a number of successful business owners who don’t want to open and manage more outlets themselves.

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