Three Issues To Figure Out When You Want To Franchise Your Business
If you have a successful store or restaurant that has been booming for the past several years, you may be thinking about opening new stores. One method of making a profit without having to run a new store completely is to franchise your business. In order to franchise your business, it needs to have mass appeal that would work in different towns. Before you set out looking for franchise investors, here are three issues that you need to iron out.
Do you have a clear business model?
Before you open up franchise stores, everything needs to be in order. Your suppliers must be hammered down, the type of merchandise that you sell needs to have a standard order, and the decoration of your stores needs to be set. Prior to starting up a business franchise, be sure that you have a business model with clear directions, goals, and a specific company culture. You want to make sure you are able to control your name and your business reputation. The best way to do this is with a clear set of directives.
How much control do you have?
Some companies allow anyone who signs a contract to abide by the rules and pays the necessary startup money to become a franchise of a business. Other companies only permit people to franchise the company if they interview and approve of them. Along with your franchise attorney, determine the best steps towards figuring out what your business franchise model will look like. Be sure to have accounting professionals come up with a dollar amount that will allow your company to appropriately set up a working franchise.
What happens if a franchise is not obeying the rules?
One of the worst-case scenarios is a franchise not operating as it should. When a business is operating under your company name, you need to have the authority to stop any actions that may harm your company name. Have your franchise attorney create clauses that determine what a breach of contract is and what will happen if there is a breach. Though you can offer warnings instead of shutting down a franchise, it is best to put in the contract that you can take over a franchise at any time if the contract is not followed. This offers you the option to determine the severity of contract breach and determine how you will deal with these issues on a case-by-case basis.