Franchising is a billion dollar industry here in Australia. Profitable franchises require you to create a replicable business model that sets your franchisees up for success. So do you have what it takes to join the likes of Gloria Jeans, Roll’d or Baker’s Delight? Let’s a take a look at what’s required to turn your business into a profitable franchise.
1. Establish a repeatable business model
Before you scale up, your existing business needs to be profitable and replicable. Potential franchisees need to see you’ve created an intelligent and systemised business model that they can invest in. Establish credibility by operating your existing business under the proposed franchise model before you take steps to sell a franchise to someone else. Focus on creating sound processes and systems that can be repeated in each new franchise.
2. Seek professional advice
In Australia, there is no specific franchise registration or approval process you need to follow, however establishing a franchise is a legal process. It’s important that you plan thoroughly and seek professional advice from an accountant, solicitor or franchise consultant. Get the right advice early so that you can create a clear framework for how your franchise will operate, including you and your franchisees roles and obligations.
3. Document your franchise model
Based on the professional advice you’ve received, reflect carefully to establish and document what you will offer your franchisees, and what you expect from them in return. This is also a good time to consider the fees you charge franchisees. Getting the balance right between a profitable franchise and enabling a successful business venture for your franchisees will be critical. There are usually two types of fees that franchisees owe; initial and ongoing. The initial fee purchases the business, while ongoing fees go toward the franchisee paying for ongoing use of your brand, systems and marketing. The more detailed your franchise model, the better equipped you’ll be to maintain high standards and prevent issues arising from lack of clarity. Remember to take steps to protect your intellectual property.
4. Be selective over your franchisees
You should be extremely selective when it comes to choosing franchisees. Don’t be too eager to accept the first people who come your way – they may have capital, but do they have the right background to run a business? Will they represent you or your brand the way you want? Can you see yourself working with them successfully into the future? A good way to avoid making rushed decisions is to establish a multi-step interview process that enables you to meet potential franchisees at least three times before a decision is reached.
5. Stay engaged and supportive
Running a franchise isn’t a ‘set and forget’ business. Franchisees will need your ongoing support, including continuing to refine business processes and introduce new and improved systems that will keep you competitive in your marketplace. The more in tune you are with the challenges your franchisees face, the better placed you’ll be to stay one step ahead and provide them with the right tools and support to succeed.
If you’re looking to establish your franchise business, get started now with a small business loan. Apply in minutes to see how much you can borrow.