How to pack a franchise on your own business [check list]

Let's start first with the most important issue, tormenting every entrepreneur at the beginning of the path to franchising.

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How to check franchise packaging readiness?

We will not delve into a complex audit, but ask ourselves some simple questions:

Do we work longer than 1 year?

Our net profit with more than 100 thousand a month?

Is our business understood by a wide audience? (Not some complicated B2B theme.)

Here you can add another question about the number of branches you have already opened (2 or more), but this is optional. In the first step, three “Yes” to these questions are enough to continue.

What does the franchise buyer pay for?

There are already so many advertising articles written on about franchise packaging that it seems that the issue has been completely sorted out.

I advise everyone about the same thing: to come up with terms, write a franchise agreement, make a landing, run an advertisement, sell and transfer to the buyer job descriptions templates, about registering an IP and a couple of files with a logo.

I strongly disagree with such a scheme!

I am convinced that the real value of the franchise is in support! The extent to which the franchisor (franchise seller) is ready to support the franchisee, remove some of the tasks in the business from him and “lead him by the handle”.

- Head of the franchising agency

Therefore, before you start creating a franchise, you need to decide how you can help your franchisee launch a business and develop it.

At our franchise packaging agency, we distinguish three types of support for franchisees:

Informational is the transfer of manuals, instructions, contract templates, internal documents, calculation tables, a financial model;

Services -

This is the creation of an advertising campaign for a partner’s region, remote selection of premises, personnel selection, or staff training on its territory, travel to the franchisee region for opening;

Inventory -

Often found support for franchises when goods, furniture, raw materials or the goods themselves are provided.

At this step, you need to understand what kind of support you can be your franchisee at the stage of opening a business and at the stage of business development.

Franchise concept

Based on an understanding of the amount of support, the franchise itself is priced: a one-time lump - sum payment (before opening) and a  monthly royalty (after opening).

This is an extremely important point! It must be remembered that for a good franchise that expects to work for a long time, the cost of lump-sum contributions and royalties correspond to the amount of support, and not the greed of the franchisor.

Of course, here the numbers are not taken from the ceiling, but require calculation based on many factors. The process is quite complicated, so I’ll just list the tools that we use and refer to our blog, where you can find more information on packaging the franchise.

Franchise Concept - Consists of:

·         competitor franchise analysis,

·         financial models for the franchisor and franchisee in three scenarios (pessimistic, optimistic, real),

·         Osterwald business models (business canvas),

·         franchise agreement

·         description of franchisee portraits,

·         franchise manuals (for franchisor and franchisee),

·         Gantt chart for opening an enterprise,

·         algorithm for working with franchisees.

·         This is what a competitor comparison chart might look like.

And this is how the document describes the whole concept of the franchise (you can notice the business outline and the SWOT analysis)

When the terms of the franchise and the whole set of support for the franchisee become clear, we can move on to franchise marketing.

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