Want to Franchise?
The challenges and advantages of building your brand

September 9th

By Sean McGarry

Franchising is an excellent way to grow your business and take it to the next level. Despite the struggling economy, the number of franchised establishments is expected to increase by 2 percent with 17,801 units in 2010; employment by 0.4 percent with 36,000 additional jobs; and overall output by 2.8 percent with a net gain of $23.6 billion. These numbers bode well for independent door dealers looking to expand their businesses without carrying the costs of each individual territory. If considering franchising, however, many challenges lie ahead so be sure to have a thorough plan in place before you begin to build your brand.            

One of the biggest challenges that an independent dealer looking to franchise will face is obtaining the rights to your business name nationally and internationally. There have been instances where businesses attempting to franchise find that another company is already using its name at a local level.

Another significant challenge is the need to create a detailed documentation of all systems and procedures throughout your company; this is necessary in order for the business to be replicated by future franchisees. A comprehensive plan can be in the form of a hard copy or an online manual. Yet no matter what form it takes, this is a huge undertaking. As a result, many companies use consultants that specialize in preparing such manuals.   

Since overhead costs associated with franchising a business are so high, one needs a significant number of franchisees to pay royalties in order to cover the overhead structure. It’s a good idea to spread the word about your brand through trade shows, social media and traditional public relations. In relation to the internal structure of the company, it is likely that the management team will have to be strengthened with a senior person designated to handle all franchising.

A company should also assess its ability to source outside capital. Venture capitalists are interested in investing in franchise companies because of the possibility of significant growth and return on investment. The investment can be used to strengthen your management team and also buy outside expertise. You must also factor in the cost of establishing a "pilot.” Although you have already started a successful business, this doesn’t mean it can be franchised. A pilot is a second unit in a different territory. If the pilot is profitable after a certain amount of time running, it is then used as the reference point from which the franchise is grown.

But what if your business isn’t booming? You can also seek the support of an established franchisor by converting your business to their brand. In doing so, you’ll gain ongoing support in marketing and sales, as well as a network of other franchisees encountering similar experiences.

The Internet is a great resource to begin your research and find the best option suited for your business. Joining an online franchise portal is an excellent way to generate franchisee leads. Also, at trade shows, you can learn more about franchising through free informational seminars and speaking with successful franchising veterans.

Franchising has a high success rate but each business is different. If you’re patient, work hard and follow the proven system, success should ultimately follow.

Sean McGarry, founder and CEO of Franchise Direct, has spent more than two decades in the franchise industry. He began his career as a franchise consultant and writer where he advised a range of companies and individuals on franchising their business or investing in a franchise. In 1998, he launched Franchise Direct, which is now one of the world’s leading franchise portals, with a network of Web sites dedicated to the U.S., Canada, the U.K./Ireland, Spain, France and Germany. Franchise Direct is headquartered in Dublin, Ireland. Its U.S. office is located in Atlanta, Ga. For more information, visit one of Franchise Direct’s suite of sites: www.franchisedirect.com , www.franchisedirect.ca , www.franchisedirect.co.uk , www.franchisedirect.ie , www.franchisedirekt.com , www.franquiciadirecta.com , www.franchisefirecte.fr , www.franchiseeurope.com .

Upcoming opportunities to learn more about franchising:

Sponsored by the IFA and taking place November 5-7 at Los Angeles Convention Center, the West Coast Franchise Expo will feature 200 exhibitors and countless attendees. There will also be more than 30 information-packed seminars and workshops available, and most of the sessions are free. Exhibiting at the West Coast Franchise Expo—especially this year—can bring great benefits. To exhibit at the WCFE, call (201) 881-1666 or e-mail exhibit@mfvexpo.com. To register for free admission to the WCFE—compliments of Professional Door Dealer magazine— click here, or visit www.WCFExpo.com and use Promo Code: GPPDD.