Almost every successful business owner thinks about ways of scaling their business and replicating that success elsewhere. Their options often include doing this through the application of their well-established business model in other locations.
When a business owner seeks to pursue franchising as a way of expansion, the process is often referred to as franchise development. But what does it mean and what are the steps involved to getting this mammoth task well-planned, organised and executed for optimal success? Let’s find out.
Table of contents:
What is franchise development?
For those exploring what is franchise development for the first time, it’s important to be aware that this is a complex process that seeks to convert a successful independent business into a franchise operation.
As such, franchise business development is the general term used to describe all the processes and operations involved in this “conversion” process.
One way to think about franchise business development is similar to that of the process involved in the construction of a house.
It all starts with the visualisation of the idea, followed by planning, implementation and execution and the follow-up processes once the franchise business is established of marketing to and recruiting prospective franchisees so that the business continues to thrive.
All in all, in the franchising world, franchise business development is the process of orchestrating and executing every fine detail towards franchising and beyond it.
The ultimate aim is to have a replicable operation that is appealing, based on a strong brand and a proven business model, holds potential for profitability and strong return on investment, etc.
What do you need to develop a franchise?
Business owners who are contemplating such a move will need to know the steps involved in how to develop a franchise.
Although they may seem straightforward, each one is intricate and detailed, and is also highly dependent on the success of the previously executed steps. Here are the main ones to follow in this process:
Step 1: Draft a franchise development business plan
Returning to the analogy of building a house, which starts with an architectural outline and plan that contains the vision for the final project, drafting a franchise development plan should be the very first step in the business expansion process.
Also referred to as a franchise business plan, it outlines the mission and vision of the company as a franchised entity. The franchise business plan also includes every single one of the elements that relate to the building of the business into a franchise network.
Such elements include but are not limited to:
- An executive summary
- Company description
- Mission and vision statement
- Business structure
- Products and services
- Industry analysis
- Market analysis
- Logistics and operations
- Marketing plan
- Business management and organisational structure
- Financing projections/financial plan
- Appendix
Step 2: Complete all the legal processes
The franchise development or business plan can be used to present to potential investors and interested stakeholders. It will contain every aspect of the overall vision of the business.
One of the most important parts of this franchise development plan is the business structure. Because the ultimate aim, in this case, is to convert your business to a franchise operation, this needs to be specified in the business plan.
But you also have to take all the necessary steps to convert your business to this new structure. For this, you will need to rely on the services of experienced franchising lawyers.
Step 3: Create an operations manual and a training system
Because you will be converting an already successful business into a franchise operation, which needs to be replicable by different people with varying levels of experience and across different territories, you also need to create an operations manual and training system, which is easy to clone.
The best way to do this is to think very deeply about every step in the process and provide clear steps to your prospective franchisee partners as to how they can start and run their business units successfully.
Some of the key things to know about how to write your franchise manual include breaking it up into several, easily-digestible sections, which are all about the business’ operational details.
Some aspects to consider here are:
- Defining the franchisor/franchisee relationship
- Business processes and procedures
- Brand identity
- HR technicalities
- Health and safety rules and regulations
- Financial management details and systems
- Monitoring
- Complaints management
- Marketing
The amount of effort that you put into creating your franchise manual and training systems will be immense. This effort should not go to waste if your proprietary information and processes fall into the hands of your competitors or some undesirable parties. As such, legal protection is a critical element to consider here.
This is why you also need to ensure that you protect yourself, your business and your processes through insisting on the signing of either a confidentiality or non-disclosure agreement prior to making this information available to prospective franchisees and sharing it with parties outside your organisation.
Step 4: Create a marketing strategy
Marketing your business to customers and prospective franchisees will involve separate approaches because these two different target audiences have different expectations from you.
Broadly speaking, however, your marketing efforts must be consistent brand-wide. When you have the broader picture in mind, your next step should be to develop your goals and the time frames during which you wish to achieve these.
Remember that you will need to work on your marketing strategy together with your franchisees as top-down approaches are seldom able to factor in marketing ideas your franchisees may have based on their on-the-ground experience with customers and what efforts they think will yield better results.
When drilling down into your marketing strategy itself, your focus should be on providing content that’s valuable, informative, engaging, and in line with the best search engine optimisation strategies. This should be done for all digital channels that you use, whether it’s social media, your website (optimised for desktop and mobile), etc.
But because digital marketing is never a static process, you also constantly need to measure, monitor, respond, test and refine your presence with continuous efforts.
As the last point here, you should not underestimate the power of word-of-mouth marketing, the modern or digital version of which is referred to as generating and managing positive ratings and reviews.
Step 5: Create a recruitment plan
The franchisee recruitment process is another critical building block towards solidifying your franchise development plans. A well-executed plan will take into account a prospective franchisee’s background/CRB and credit score checks, examine their financial history and look into possible bankruptcy or lien judgements.
Common pitfalls to avoid during this step include:
- Not skipping the brand persona by ensuring you have a clear ideal franchisee avatar;
- Not using a well-planned strategy;
- Avoiding using digital marketing channels to advertise your offering to prospective franchisees;
- Not being well-prepared for the initial meeting or first interview with the candidate; and
- Not viewing franchisees as business partners but rather as employees.
Step 6: Maintain franchisee support
Once the right franchisees have been recruited to your franchise network, it’s important to maintain their levels of productivity and professional expertise to ensure that there is consistency in the brand’s offering, irrespective of location.
Hence, maintaining ongoing franchising support is expected by a franchisee from a franchisor and is also an investment a franchisor makes in the furtherance of their franchise business.
Training should therefore be not only initial – at the outset of the business relationship – but also include providing assistance with site/location selection, financing, marketing and advertising. Assistance can also be provided by dedicated teams to each franchisee on an ongoing basis.
Franchisees can also access a support structure from the existing network of franchisees and all this can potentially be brought together through annual franchisor meetings and conferences.
What are the signs of successful franchise development?
So, once all the above has been put in place and executed, what can a franchisor expect? In other words, what are the signs of successful franchise development?
Although not every franchisor measures their success in the same way as the next, some common features of successful franchise development may include:
- Financial success and clear financial projections
- A replicable business model
- A high-demand market
- Clear brand identity and strong brand recognition
- Uniformity in operations
- Consistency in product/service provision
- Sustainability
- Strong training and support
- Shared mission, vision and goals
Should you outsource franchise development processes?
A final question to consider is whether to outsource your franchise development processes or to have them performed in-house. This question will have different answers for every franchisor in the industry owing to the complexity of their operations and their unique offerings.
However, generally speaking, it can be said that smaller franchise operations usually outsource tasks such as bookkeeping, accounting, payroll, back-end support, etc. This is done so that the franchisor can rely on an existing pool of talent.
Consequently, when ready and more mature, franchisors can start thinking about building their in-house teams when resources and expertise become more readily available.
The bottom line
Building and growing your franchise through the franchise development process is not for the faint-hearted. It requires strong dedication, perseverance and commitment.
And since you can outsource some of the tasks involved in the process, why not consider getting in touch with our franchise marketing specialists to help you create your marketing strategy, execute and refine it for optimal results?
With extensive experience in helping global franchisors expand and exceed their marketing goals, we’re a partner you can trust to help you reach ‘franchise fame’.
