Established multi-franchisor Nigel Toplis outlines his ‘ten commandments’ for turning a business into a successful franchise.
1 – Knowledge
It is critical you understand the ins and outs of franchising, their distinct peculiarities, and how they may apply to your industry sector.
2 – The Market
Every business needs a marketplace whether franchised or not. Be sure your business has one that’s big enough – and not just for you but for your network of franchisees too.
3 – Feasibility Check
To be a successful franchise, the business must be repeatable. It must have a business system and should appeal to a whole cross-section of people.
4 – System
A business system is ‘number one on the list of must haves’. I would even argue that the product itself is less important than a robust and proven business system. This may sound stark but ‘A good product is no guarantee of a successful franchise, but a poor system is virtually a guarantee of failure.’
5 – Comprehensive Manuals
The method of operation must be thoroughly documented. Remember, that sales/marketing/product/pricing/finance and accounts all form part of the system. The franchise owner must feel confident that, if he or she follows the step-by-step guide laid out in ‘the manual’, they will achieve an element of success. In other words, the scale of that success should be directly proportional to the effort exerted by the franchise owner.
6 – Documentation
You will need formal documentation outlining the legal requirements on all sides. Primarily, this will be a franchise agreement and other documents detailing the responsibilities to be undertaken by the franchisor and franchisee with regards to their own relationship, as well as those of their customers and suppliers. Robust legislation is vital.
7 – Funding
Don’t try to create a proper and ethical franchise on the cheap as, in the long run, it is likely to fail. Be sure you allocate sufficient funds to develop your operation. This money needs to cover establishing a system, writing manuals, recruiting franchisees, completing a number of pilot operations, while surviving yourself for at least two years before you can draw income from the business. A budget of £80k to £150k is not unreasonable.
8 – Recruitment
You cannot underestimate the importance of having good franchisees. These are people who understand you are building the franchise, and who you believe will have the same passion and pride in the business as you do.
9 – Single-mindedness
It is often tempting to bend your own rules by accepting weak prospective franchisees just because they have the money to invest in ‘your baby.’ You may also be tempted to
chop and change the franchise agreement just to suit the wishes of these individuals. But the simple answer is ‘Don’t‘. Good franchise owners appreciate strength, a realistic vision, confident leadership, a solid business system as well as genuine ongoing support from their franchisor. They don’t want, nor will they respect, a franchisor without a backbone.
10 – Take advice
Don’t feel embarrassed to speak to the British Franchise Association (BFA) and get advice from people with many years of experience of running franchises. Talk to reputable and ethical franchisors who have solid business histories. Most franchisors will be happy to advise and assist. After all, we’ve all taken advice from people at some stage during our business lives.
About Nigel Toplis: Is managing director of four franchise businesses: Recognition Express (badges, signs and promotional gifts); ComputerXplorers (provides ICT educational classes for three-to-13 year olds); Techclean (a leading provider of system hygiene services to businesses in the UK); and Kall Kwik (a licenced operation and premier business print and design company in the UK). Nigel is a past chairman of the BFA, has written three books on franchising and, in 2007, became a Fellow of Lancaster University.
