When you have a strong concept and your business is performing well, it’s natural to consider expanding through franchising — a highly effective method of commercial growth, provided that key steps are followed to ensure the project is carried out under the best possible conditions.
Questioning the feasibility of franchising is already a step forward in developing your business, but not all concepts are viable as franchises, and not all entrepreneurs are meant to become franchisors.
But if that is your main ambition, you may be wondering how to become a franchisor? First of all, you should know that the franchisor’s lifecycle is similar to the industrial lifecycle, which consists of three stages: prototyping, pre-series, and industrialization. Applied to franchising, this translates to design, experimentation, and network development. In this article, discover the 10 steps to becoming a franchisor.
1. Understanding the franchise market
First and foremost, you need to fully understand what you’re getting into, because not everyone can become a franchisor! It represents a real career shift, and it’s not for everyone. The first step is therefore to ask yourself the right questions — studying the franchise market as a whole, understanding how it works, the advantages and disadvantages it brings, and the new role you’re about to take on, etc.
2. Formalizing your concept: modeling and experimentation
Are you well informed about the franchise market and confident that your concept is viable? Then it’s time to start formalizing your business model! But be careful — your concept must be innovative and clearly stand out from what already exists on the market. It should be tested, preferably across multiple locations, to refine and improve it before moving into the experimentation phase.
You will then need to define the model of the franchised unit (size, type of location, etc.) and potentially make adjustments compared to the pilot units. Indeed, if your concept is not yet fully developed, it will need to be refined to improve its economic performance across all entities. This may involve aspects such as marketing, redesigning the original logo and tagline, restructuring the range of products and services, or even reworking the architecture — in some cases leading to a version 2 of the concept. It is advisable to wait for the next season before drawing conclusions about the different modifications made.
But for the network to operate effectively, it is equally important to think about your strategic organization as a franchisor: development, logistics, purchasing center, etc. You must also define your own rules of the game, such as the conditions for assigning territories to franchisees, for example.
3. Ensure the strength of your concept
Indeed, experience will demonstrate the strength of your concept. Your business must be performing well, and you should have at least two consecutive positive financial statements for your establishment to become a pilot unit. This minimum two-year experience allows you to test the concept, understand the key ingredients of your success, and identify areas for improvement. A simple concept that “works” is not always viable as a franchise. You need to experience the field firsthand to understand the challenges and know why your idea succeeds, so you can replicate that success elsewhere.
4. Drawing up the DIP and franchise agreement
Next comes the legal setup phase. As a franchisor, you will need to draft the Pre-contractual Information Document (commonly known as the DIP) and the franchise agreement.
The DIP includes the company’s identity, information about its executives, contact details of active franchisees and those who have left the network within the past 12 months, the contract duration, financial terms, and more. It must be provided to the franchisee at least 20 days before the contract is signed.
The franchise agreement outlines the general and financial terms of the partnership, the obligations of both the franchisor and the franchisee, as well as the terms regarding the transfer of know-how and the end of the contract.
5. Passing on know-how with the operating manual
The transfer of know-how from the franchisor to the franchisee, as well as the sharing of data related to the expertise used by the franchisor to sustain the network, takes place through the operations manual. Indeed, to ensure that your concept performs consistently across all units and that your brand image remains intact in every region, you must make sure that all future franchisees benefit from the same quality of tools and know-how available in the pilot unit. After all, these are the key elements that make up THE recipe for your success.
The information gathered from the operational teams in the pilot unit will be transcribed into operations manuals, allowing the franchisee to operate the point-of-sale concept smoothly and under the same conditions as if it were a company-owned location.
The franchisee must be fully aware of the methods, criteria, and principles that have led to the commercial success of your concept. They will have access to all this information through the operations manual (or “manop”), which summarizes it within a commercial agreement that is legally binding.
6. Launching your franchise development
Once you have refined your concept and determined your investments and objectives, you can start presenting them to your future franchise candidates. This recruitment phase is delicate in the life of a network and crucial to its success.
First, you will need to define a recruitment policy that aligns with the objectives and specificities of your brand. Most importantly, you must make the right choices when selecting your first franchisees, who will become your “ambassadors.” They will not be mere executors but true partners and key players in your development. They must demonstrate initiative and a strong entrepreneurial spirit in order to actively contribute to improving the business model when necessary.
Combining your recruitment strategy with a candidate management software such as Cerca, specifically designed for franchise networks like yours, will allow you to structure all your actions and accelerate the development of your network without compromising on quality.
7. Developing your franchise network
Once your first ambassador franchisees have signed, you will need to maintain a steady pace of openings to improve performance and ensure sustainable growth. Using a candidate management software such as Cerca will help you structure your recruitment process by setting up stages and lead qualification statuses, as well as providing a range of statistics to enhance the quality and monitoring of your development.
8. Manage your franchise network
The success of the development of a franchise network does not stop at the recruitment of franchisees. An operational franchise needs to maintain and support its network, which is achieved through ongoing engagement and animation. Indeed, once they have joined the network, you must provide your franchisees with the necessary assistance and support that will contribute to their success — and therefore, to yours as well.
Network animation helps create synergies among the different members of the network, while also uniting franchisees around shared values — those of a strong brand. Tools like Cerca allow you to manage network operations, share news, and centralize visit reports (ratings, comments, files, task tracking), enabling network managers to stay connected with headquarters and keep your community of franchisees motivated.
9. Structuring your network head
Don’t be afraid to be ambitious! The growth of your network must be carefully planned. An increasing number of franchisees is a positive sign of success, but for this momentum to last, the structure of the head office must evolve accordingly. This requires high-quality recruitment within the head office team, as well as training, availability, and the embodiment of the same values you wish to promote throughout your network.
10. Challenge your concept
The key to success for any business? To evolve while staying true to itself. Don’t be afraid to experiment, reinvent yourself, innovate, and think outside the box! Your concept must evolve to adapt to new consumer expectations, competition, other franchisors, and the technological developments of the market.
Remember to regularly assess the level of satisfaction within your network, involve your franchisees, and continuously improve your concept. A franchise network management tool like Cerca allows you to maintain close contact with your various local representatives. Don’t hesitate to ask them for field feedback to continually refine your concept and stay close to your clients and consumers.
