Wanting to continue developing your business is only natural when your project is already experiencing some success. If you’re here, it’s because you find yourself in that very situation. Turning your business into a franchise network is an excellent way to achieve greater goals. In this guide, we’ll walk you through all the steps needed to take your professional journey to the next level. You’ll learn, among other things, how to create a business plan and what this transformation entails from a legal perspective.
The importance of a well-defined concept
To be able to franchise your conceptit must first be clearly defined and, most importantly, proven to work. You can develop a franchise in any industry, provided that you have full mastery of its operations and specifics. The most promising sectors, and those with many successful franchise models include beauty and wellness, food and beverage, automotive, and real estate.
A great way to learn more is to attend franchise fairs. You’ll need to immerse yourself in what already exists and identify what hasn’t been done yet in order to innovate and stay competitive.
Drawing up a business plan
Creating a business plan is essential when you want to turn your company into a franchise. It should be done after conducting a market study to ensure the feasibility of your project. A business plan allows you to verify the financial profitability of your concept. To gain the support of banks and other business partners, this verification is crucial. In your business plan, you should present:
- Your concept
- The market analysis you have conducted
- The business model you rely on (there are many to choose from)
- Your communication strategy
- Your marketing strategy, etc.
On the financial side, it should also include investment costs, a balance sheet and projected income statement, as well as a financing plan and a cash flow budget.
The importance of a pilot unit
To move forward with greater confidence, a company needs to ensure the reliability of its processes. Having a pilot unit will help you validate your project. The idea here is to test the conceptual model you’ve developed against the reality of the market. More concretely, it involves creating one (or several) points of sale that replicate real operating conditions as closely as possible. Location, human resources, pricing, and suppliers are among the key characteristics this unit should include. These are the elements you will need to replicate for your franchisees.
The success of such a venture will be the proof of your mastery of know-how as a future franchisor. Gaining this confidence will show you that you are ready to share your experience with your future franchisees, who will in turn benefit from your training programs.
Drawing up an operating manual
Now that you know that you can share your know-how, you’ll need to describe it precisely in an operations manual. This document serves an educational purpose — it allows franchisees to replicate your methods and procedures. The operations manual covers topics such as:
- Marketing
- Human resources,
- Management
- Production,
- Your sales techniques,
- The layout and design of your premises,
- Accounting, etc.
Moreover, feedback from your franchisees will enable you to refine and improve your concept over time. In this way, you can strengthen your model and ensure it remains relevant. You must continuously monitor market trends and competitors to keep evolving.
Pre-contractual information document (DIP)
According to the Doubin Law of December 31, 1989, every franchisor is required to provide a franchise candidate with a Disclosure Document (DIP). This must be done before signing the franchise agreement. Once the franchisee receives this document, they have 20 days — the legal reflection period — to sign the contract. The purpose of this document is to ensure transparent and comprehensive pre-contractual information so that the candidate signs with full knowledge of the facts. The DIP must, for example, include:
- The identity sheet of your brand
- Your market study
- The history of your network (creation date, list of members, turnover evolution, etc.)
- Your development prospects
- The annual accounts of your brand (for the last two fiscal years)
The contract
Containing several clauses, it is the document that defines the rights and obligations of both the franchisor and the franchisees. It includes key clauses such as:
The intellectual property clause
This is the clause through which you grant the franchisee a license to use your brand. It also defines the commitments and obligations of both parties regarding brand protection and maintenance.
The supply clauses
They may designate exclusive or recommended suppliers. These clauses clearly define the range of products subject to the exclusivity obligation.
The non-compete and non-affiliation clause
This clause is very important for you as the franchisor. It prevents the franchisee from engaging in any activity similar to that of your network. It also prohibits them from joining or affiliating with a competing network.
Determining how to run your network
Here, you’ll need to determine the skills and profiles required to support your network. This involves thinking about the structure of your head office and deciding on the philosophy that will guide the management of your network. This could mean adopting a traditional top-down approach where the head office decides what the network implements.
You can also choose a more collaborative strategy that involves participatory structures. In such an approach, all members of the network are involved in the decision-making process. Don’t hesitate to seek the support of a franchise expert or to use franchise management software. This valuable assistance will help you assess the best way to lead and effectively manage your network.
Ultimately, any company with solid experience and proven success in its field can franchise its concept. This requires following several key steps, the main ones of which have been described in this article. For optimized management, it is recommended to use franchise management software that will support you in every aspect of your network.
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