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 When it comes time to expand your business, there are two options: Open new locations yourself or franchise the business to other individuals. The latter option is often the most attractive because it removes much of the burden from a business owner's shoulders. You don't have to manage that business yourself, which means it earns passive income.
But how can you efficiently and successfully franchise a business? There are plenty of options on the table; taking this process in stages will be your best bet.
Franchise: Protect Your Rights
When you franchise a business, you are essentially giving someone else the license to use your trade name, brand, logo and other intellectual property for their own commercial purposes. For this reason, the first step is to make sure all of your intellectual property is registered and adequately protected.
Many countries have trademark and patent laws that require individuals to respect intellectual property rights and allow business owners to claim their marks. If this isn't the case, you are still protected by the World Trade Organization's trade-related intellectual property rights, or TRIPS, program. Any mark or brand that you wish to remain exclusively with your business should be registered before you franchise that business.
Build and Monitor ROI
Before you franchise your business, it is essential that you build and establish a respectable return on investment. Otherwise, your franchise locations are bound to fail, and you won't be able to interest potential owners or investors. You might want to hire a financial or business consultant, or perhaps a marketing director, to help boost sales and reduce expenditures. Make sure you have a valuable and relatively secure business model before you consider a franchise.
Create Efficient Policies
When you franchise your business, you will pass on not only the intellectual property, but also the policies and trade secrets that make your business a success. These policies should be established and recorded in such a way that you can teach prospective owners and help them to understand how they can become successful, too.
Many franchise owners have extensive training materials they use to prepare customers. These might include guides to choosing a location, sales procedures, food preparation policies and more. Not only will this help your customers succeed, but also they ensure that all franchise locations uphold your standards, both morally and legally.
Expand First
Just because your business is a success in one location does not necessarily mean that it will succeed elsewhere. Consider opening other locations on your own to see how business does in different geographical areas before you turn your business into a franchise.
Not only will this help you understand the expansion process, but also it will allow you to gauge success in different areas. A business that thrives in a downtown metropolis might fail in a suburban area; it pays to know this information in advance.
Consider Promoting Employees
You don't necessarily have to franchise your business to employees, but staff members can be a crucial element in the process. If you franchise your business to Customer A, for example, you might send three of your best employees with him to help him establish the business.
However you choose to go about this process, every business owner can benefit from good counsel. If you're going to franchise your business, consider hiring an attorney who can oversee the process and help you make decisions along the way.
Content by Steve Thompson, Associated Content for MercaTrade.com
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