How To Turn Your Business Into A Franchise

15 Mar, 2024

LinkedIn Post

Medium Article

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I had NO idea about what building a franchise would look like until this conversation.

I hopped on the phone with a finance consultant the other day and she broke this down for me.

The example I’m using in here is a bookkeeping business as this is what my wife runs.

To further clarify, this is the idea of taking an existing business and becoming a “franchisor”. Not buying into another franchise, but STARTING a franchise.

Maybe it was a timing thing, but I recently read a few articles on the founder of Dunkin’ Donuts, William Rosenburg and how he franchised Dunkin Donuts and grew it to what it is. So when this topic popped up, it piqued my interest.

Here’s my summary of the call and how it could be applicable to you and your business.

1. CREATE SYSTEMS

The operations that you have should be dialed in enough where you can share your systems with others. This should be an obvious one, but there needs to be enough forethought in your process with the desire to franchise that what you do can be taught and replicated by others.

2. SET UP

This will take time and money, but if you see the big picture of what you’re building, your patience will pay off. This process might take around 6 months to complete, so hang in there.

You’ll need about 200k revenue minimum before you should think about becoming a franchisor.

At this point, you’ve already created SOPs and have been operating and fine tuning those for a while. But what you need is to start creating the franchise disclosure document. This could be a couple hundred pages potentially. Groups like Peak Business Resources help write these. Things to take into consideration when putting this together:

- What marketing looks like
- Franchise fees
- Royalties 

And example of royalties might be about 6% on annual revenue.

There’s a hundred ways to go about it, it’s during that phase that you figure it out.

The way you want to think about this is “how can you take your business and expand it up so that you have a footprint in the areas you want to grow in”. This can be done by YOU opening new locations OR by going the franchise route.

3. SECRET SAUCE

Although this is the last step I talk about, this should be one of the first things you think about as you’re starting this process. What is it about your business (not you) that is unique? What things do you do well that set you apart from the rest? Sometimes it’s not anything that’s unique or special on the surface, but it’s the way you position it.

When you’re thinking about the secret sauce, here are some questions to think through:

• What makes the business stand out?
• What is the proof of concept?
• What processes are in place that you do really well?
• What makes you unique?
• How can you replicate your processes?
• How would it benefit a franchisee to join?

All of this boils down to 3 things in the end:

1. You need a replicatgible process with SOPs that can be taught
2. You need a “secret sauce” or a way to position what you do in a way unique to you
3. Clearly identify what the benefits are for a franchisee to join

This was a 35,000 foot overview, but the lesson here is that starting a franchise is NOT out of reach.