Franchising is a model that attracts many entrepreneurs, notably thanks to its advantageous status and the possibility of quickly expanding their business. The number of franchisors and franchisees continues to grow, and in 2020 this market represented €63.8 billion in turnover. It is therefore natural that many entrepreneurs are interested in this model and wish to become franchisors.
Are you an entrepreneur? Do you want to give new momentum to your concept through franchise development? Do you have a unique approach in your field? Do you want to launch your concept as a franchise but don’t know where to start? What steps should you follow? How should you organize yourself? We tell you more in this article.
1. Conduct a pilot phase
"Franchising is the art of excelling in the reproduction of averages.".
The franchise system consists of duplicating a concept that works in one or several locations. Before beginning its rollout, it is essential to first test the concept in a real-life situation through at least one pilot unit.
This prototype will serve as an example to duplicate your concept, so it is essential that it reflects the image you wish to convey. This pilot phase, carried out on at least one sales outlet over a minimum period of 2 years, must demonstrate and prove the economic profitability and viability of your project. One key action: test, refine, and then replicate! It is crucial that your concept is not only viable but also original and innovative.
This pilot unit will serve as your reference:
- It represents your showcase, for example, to present your concept to future franchisees or investors.
- It can be used as a training location for your franchisees and their teams.
Is your prototype imperfect? Be patient and keep testing, as once the process is launched, it will be difficult to go back. It is essential to follow all the steps and document the procedures, as you will compile all these elements in the famous “Bible”: your operations manual.
At the end of this testing phase on your pilot unit(s), and if you have determined that your concept is reproducible, you can draft your business plan: one for the network headquarters and one for a typical location.
2. Create a business plan
Writing a business plan is an essential step. This document is key and will be extremely useful for presenting your project and convincing future partners, financial investors, and franchisees.
Indeed, more and more franchisors are turning to investment funds to grow faster than their competitors in emerging or highly competitive markets, where taking the leading position is a major advantage. It is also a way to create value for their brand.
Upstream or in parallel with this business plan, you will need to carry out a market study to determine whether your project has potential and, above all, to identify the originality and uniqueness of your concept compared to existing players who represent your future competitors. This will allow you to assess your market potential and position yourself effectively.
This market study should allow you to determine the maximum number of locations you can establish in a given country or area. Specialized institutes in the field of franchising, such as the agency Territoires et Marketing, have been a reference in the sector for several decades and are an almost essential partner for developing this strategy (see https://www.territoires-marketing.fr/ for more information).
There is no single model for a business plan, but since it serves as your presentation document, it must include the key elements necessary to understand your project:
- The project description: the market study, communication strategy, competition analysis…
- Financial information: your business model, projected balance sheet, financing plan, required investments…
3. Write the essential documentation
The Pre-contractual Information Document
This document is required by the Doubin Law of December 31, 1989. It obliges the franchisor to provide the DIP to the candidate before signing the franchise agreement. Without it, the contract will be considered null and void.
It must include certain mandatory elements such as the company and brand identity sheet, the brand’s history, information about the franchise agreement, and the national market study.
The franchise agreement
It includes the elements contained in the DIP and defines the rights and obligations of both parties.
It must be signed at least 21 days after the DIP. It contains the key information: contract duration, renewal conditions, terms for the transfer of the franchisor’s know-how, details of the assistance provided to the franchisee, the confidentiality clause, and other exclusive clauses.
The operations manual
It brings together all of the franchisor’s know-how. It serves as a tool for development, training, network management, legal evidence, and certification. It is the result of the franchisor’s experience and therefore acts as a true reference point for every franchisee. The manual allows
your franchisees to implement your methods and procedures in order to replicate your concept. It must therefore include your recipe for success, namely: your story, the concept idea, marketing elements, recipes, layouts, and more.
It is governed by three golden rules: it must be secret (confidential), substantial, and identified.
4. Communicate and recruit your franchisees
Afin de recruter vos candidats, vous avez la possibilités différents canaux :
- Specialized websites: L’Observatoire de la Franchise, Toute La Franchise…
- Les salons et forums professionnels : Franchise Expo Paris, Go Entrepreneurs...
- Social media and your website
- Specialized press: Franchise Magazine, for example
And then will come the time when you recruit your first franchisee. You will then need to structure your network and ensure that you can expand quickly and in a controlled way. That will be the topic of another article. On all these matters, using a comprehensive solution like the collaborative platform Franchise On Cloud is a real asset on the road to franchise success for any brand.
