There arrives a time in the development of every business that a choice has to| choice must| decision needs to} be made concerning whether or not to expand to reach a larger marketplace and, if this is so the best method to reach that goal. Franchising, which is one strategy of enlargement, has become more popular in the previous 3 decades. There is no doubt regarding its success but the important questions are whether or not it is right for you and whether or not you are prepared to be a franchisor. To help answer those questions, let’s explore what being a franchisor requires, mentally, physically and financially.

You first need to appreciate that franchising is a business in and of itself. Your existing business ( the fundamental concept which you would like to franchise ) is another business. It is necessary , therefore , for you to begin adjusting your thinking to the new business at hand . It is, of course, beneficial to have a unique or superior service or product concept to offer to the public ; [**] it won’t hold up well without a good franchise system built around it. Inversely, some less than superb concepts have made a name for themselves as a consequence of a superior franchise system.

The single most crucial side of any franchise system is the trademark or service mark which is being licensed to the franchisee. Your first priority should be to design a completely unique mark by which your franchise system and its goods will be identified. You then must search the files of the central government and the states in order to determine whether anyone else is presently using the same or a similar mark. If you’ve got a green light, you must go on to secure a registration of that mark for yourself. Your franchise agreement must shield your interest in those marks and you need to set up stern and well implemented standards for the franchisee to follow in order not to endanger those marks.

The offer of a franchise is subject to state and Fed. laws. The penalties for failure to comply with those laws can be damaging both to our pocketbook and your reputation. You have to present prospective franchisees with a specially prepared declaration document ( known as an offering circular ) in strict obedience to those laws at least ten working days before they sign the franchise agreement or pay you any cash. There also are fifteen states that might need you to register the offering and submit the declaration for review before selling can occur inside their jurisdictions. Additionally, any form of advertising which is used to solicit a prospective franchisee must obey governmental rules.

There is more to being a franchisor than simply having a franchise agreement and an offering circular. The franchisees who receive that notification and at last sign the accord must be trained to operate an outlet in an organized manner. Therefore , an operations manual must be prepared and a training program should be in place. A staff of qualified individuals who will run the franchisor’s organization and train the franchisees must be assembled. Once more, remember that franchising is a different business. Thus any existing manual which simply summarizes the daily conduct of your present business may not be adequate to explain to a franchisee how she is to operate your idea. You must develop a program of continual field support to assist franchisees with issues which they may confront in daily operations of the outlet. The team assigned to that function will also monitor and report on the franchisee’s compliance with your standards. The creation of an aggressive advertising campaign to plug your franchised outlets and the image which you wish them to convey to the market is of utmost significance.

Although federal and state rules do considerably repress your capability as a new franchisor to show the income potential of an outlet to a prospective franchisee, it’s still smart to have a prototype of the typical outlet in existence in order to indicate the feasibility of the idea and your actual hands-on experience in its operation.

It is also advantageous from a sales perspective to have an actual facility which a prospective franchisee can visit since you will be engaged in a new business ( franchising ) ; your present business should be secure enough to function without your daily collaboration. Likewise, don’t expect to raid the ranks of your present organization to staff the new business. Remember, they have got to be replaced.

Ken Hollowell is considered one of the countries leading franchise specialists. Ken has developed over 800 different franchise firms during the last 35 years.

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Ken Hollowell, President/CEO of Profran Consultants has over 30 years been consulting with companies wanting to become a franchisor and develop a franchise system. Ken Hollowell has developed over 800 franchise business throughout the world. He is one of the most sought after franchise consultants in the USA. In addition to the franchise development work, Ken prepares private placement offering for companies needing to raise funds for their projects or companies. Ken can be contacted at www.pro

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