Opening a franchise business is very advantageous compared to those who decide to start a business all by themselves. The benefits are attributable to a number of factors, which could determine its success, ranging from the opportunity to exploit the experience and reputation of the parent company to the possibility of using qualified assistance and management; from the opportunity to increase their profits to the strategies of sharing between franchisor and franchisee.
The positive aspects of a franchise business could also be borrowed if a company decides to transform its business and invest in this sector.
It must be said that the transformation operations are not at all simple because, the only idea of departure – albeit innovative and positive – cannot suffice.
A franchise business, to be successful and profitable, presupposes the recruitment of affiliates, which is not always simple. Just as it is not easy to manage the network of recruited affiliates, the organization of the stores and the contracting practices.
Here’s what you need to know, and do not overlook, if you want to turn your business into a franchise business …
1) Knowing the market
We have said that the idea is not enough. In fact, it is necessary to understand if the idea is economically sustainable. The analysis of the market and of the different product sectors can help in estimating the level of demand for the products that you intend to market and make available to affiliates. Going into the detail of the market analysis it could happen to have indications on commodity sectors with the highest demand in areas diametrically opposed to the idea of departure.
2) Identify the brand and make it unique
After identifying the sector in which to launch or transform the company into a franchise business, we move on to identify the name and the brand and to protect them. In fact, the distinctive signs of an activity are essential, as they represent an important factor in corporate recognition. The registration of the trademark gives the holder exclusive rights to use that, subsequently, will be partially transferred to the affiliates.
3) Hypothesize costs and time
When you decide to start a new business, or to relaunch the existing one, one of the first things to do is to draw up a business plan. The business plan is a document that contains the summary of the business idea, with a detailed assessment of the economic and financial feasibility, within the time boundaries and implementation methods of each phase of the project. By simplifying, the business plan serves to put what is needed for setting up a business, how much money is needed and how much time is needed to get it up and running.
The business plan will be followed by a marketing plan – the organization of all the activities to be carried out – and a communication plan that will plan the messages to be transmitted to the target group of the franchised business.
4) Defining the type of franchise
The definition of the types of franchises is that activity that precedes the drafting of the model of contract to be shared and signed by the franchisee. The types of franchises are 3: distribution (the franchisor who grants the marketing right also sells the products to the affiliates); of production (the franchisor produces the products and distributes them using the network of affiliates); services (an activity that involves only the marketing of services and not of products).
5) Establishing the sector contract
The franchise is based on the collaboration between a company that produces or distributes certain products and a company that markets them. This collaboration is sanctioned by a franchise agreement, an official agreement to all intents and purposes, with which the duration of the contract between franchisor and franchisee will be defined, the presence or absence of entrance fees conferred by the affiliates, the royalties collected by the franchisor, the obligations and duties of the franchisee and the franchisor and, finally, the protection clauses. The drafting of a good franchise contract will also help in the management of its affiliates.
6) Creating and organizing the network
The franchisor has obligations towards affiliates. These obligations already start during the organization of the affiliate network with the drawing up of a clear, complete and economically sustainable affiliation program for affiliates. Likewise, it is important for the franchisor to have control over the dissemination of their brand and the territoriality of the business and to ensure that in the same geographical area there is not too much competition between its affiliates.
7) Creating information material and defining the image of the stores
The image of the store, a reference point for the franchise business, is a decisive factor that should not be underestimated. The organization of a sales point must be designed to guide customers from the outside to the inside, from the windows to the organization of the spaces and the arrangement of the shelves. A shop must be welcoming and functional. In the same way, all the informative material: from brochures to catalogs, from exhibitors to business cards, requires an important investment, to be taken care of in the smallest details.