Have you considered converting your existing business to a franchise? A pro offers insight.
By Brandon Moxam, U.S. Lawns
More and more business owners are realizing their dreams of expanding their business and growing their revenues through franchising.
Franchising—an arrangement where one party grants another party the right to use its trademark or trade name as well as certain business systems and processes to provide a good or service according to certain specifications—provides local business owners with instant, national brand recognition and an immediate, competitive edge.
The benefits of becoming a franchisee
An existing business can compete at a higher level through franchising.
It can be a lonely world out there for independent, small business owners. They must not only manage employees, customers and operations, but also develop brand recognition, differentiate themselves from competitors, and acquire and retain profitable customers. Juggling all areas of a business can be an overwhelming task, which can, in turn, hinder growth.
From day one, franchise owners have answers at their disposal, instead of the uncertainty, inexperience and challenges that can plague small, stand-alone startups. Franchise owners have access to proven systems and best practices to run a successful business; a vast, national network of support and fellow franchisees from whom to build relationships and to learn; and, the national buying power of a major brand for purchasing vehicles, equipment and supplies.
Steps to becoming a franchise
The entire process for winning a franchise requires a healthy investment of time. The franchise recruitment process typically takes between eight and twelve weeks.
The process is always driven by the prospective franchise candidate, who takes the initiative to inquire about converting and expanding an existing business to a franchise. Inquiries can be made by phone to a company in which you’re interested, or by perusing a company’s website and submitting an online form. There is also a good deal of information available from independent franchising groups on the Internet, such as the International Franchise Association (www.franchise.org), Franchise Direct (www.franchisedirect.com) and Franchising.com.
A member of a franchise recruiting team will then contact the candidate to determine the potential for a “good fit” for both the candidate and the franchising company. During this initial phone conversation, the recruiter provides a general overview of the franchise system, outlines start-up costs, and asks the candidate questions about how they currently operate, and what, in particular, interests them about the company.
The candidate is then typically asked to complete an online questionnaire, which asks for detailed information about work history, income, and other key financial information, and poses several “questions to consider” to ensure the candidate is aware of the financial requirements for owning and operating a franchise. Oftentimes, a franchisor also presents a set of expectations for franchise owners regarding environmental stewardship of operations, or involvement in the community in which the franchise operates.
Many companies are also interested in the candidate’s personality, temperament and interpersonal style, and ask candidates to complete a personality survey. This provides a recruiter with a better understanding of how a prospective franchisee is likely to respond to the most common opportunities and challenges of owning a franchise. The survey results also give a recruiter key insights into how a candidate prefers to communicate and how the owner can be best supported based on an individual’s business and people management style.
The Franchise Disclosure Document
A recruiter then guides a candidate through a discovery process that is a review of the Franchise Disclosure Document (FDD). The FDD provides extensive information about the franchisor and the franchise organization so the potential franchisee has enough information to make an educated decision about a franchise investment and its risks and expected costs.
The FDD includes information regarding:
- The franchisor and any parent companies, predecessors and affiliates
- Identity and business experience of key persons
- Litigation history of franchisor or its executive officers
- Bankruptcy information
- Initial franchise fee, which often includes costs for initial inventory, signs, equipment, leases, or rentals, and estimated total initial investment
- Restrictions on sources of products and services from suppliers
- List of franchise outlets
The home stretch
At this point, if both parties are still interested in moving forward in the recruiting process, the candidate is usually invited to attend an “open house” at the franchisor’s home office. The open house provides candidates with a chance to meet the franchising company’s executive team, and to take a closer look at its systems and support network.
The candidate then returns home, and a decision about whether or not to offer a franchise to a candidate is typically made within one week.
Converting your business
If awarded a franchise, the owner of an existing business is then awarded a franchise territory and converts its business name to the franchisor’s name. Franchisors will have already predetermined the size of territory that is required for a sustainable customer base.
The new franchisee keeps its existing customers and, in many cases, maintains its existing corporation—the corporation is now simply doing business under the new trademark of the franchisor via the franchise agreement. The franchisee then notifies its customers of its name change.
Start-up costs are typically much less to convert your business to a franchise than to start from scratch because your business will already have the basic equipment and employees needed to operate. However, because franchising involves implementation of a consistent set of operating, performance and graphic standards, the franchisee will be asked to make some changes. In many cases, special financing and discounts are available to help smooth the transition as much as possible.
Tools to ensure success
Franchisors provide their franchisees with a valuable set of tools to help franchisees in following a proven approach for building and maintaining a sustainable, large-scale business while also ensuring a positive and professional experience for customers. These tools are designed to reduce the cost and effort spent on critical but often time-consuming administrative tasks so that owners can focus on the complexity of servicing their customers. These tools can include:
- A standard operating manual for all policies and procedures related to running a successful, business.
- Ready to use templates for budgeting and planning, bidding and estimating, customer service and contracting, routing and scheduling, and quality control and project management.
- Guidelines for employee management and development, including a standard set of employee job descriptions, and an employee training manual that includes both video and classroom materials.
- Access to an online survey dedicated to a specific business for customers to provide feedback about their satisfaction.
- A set of marketing materials, including stationary, envelopes and brochures, with the franchisor’s logo and a consistent look and graphic design, but personalized to each franchise.
A franchise’s success and growth is accelerated most quickly by a strong and accessible support network. Many franchisors provide the tools for branding but don’t always follow through with a team of support advisors, industry peers, and business mentors. At. U.S. Lawns, the company for which I am director of brand development, owning a franchise means joining a network of 260+ businesses that follow the same systems, best practices and processes, receive the same training, and strive for the U.S. Lawns standards of excellence. Being part of the U.S. Lawns network has other advantages, such as a dedicated advisor who’s assigned to a franchisee on day one to help set business goals and then offer growth strategies for the long term. For franchisees, assistance is never more than a phone call away.
Franchisors also hosts group meetings, conference calls, regional meetings, and an annual conference for its franchisees to share best practices, conduct operational and sales training, and promote camaraderie amongst franchisees.
Through franchising, you can expand your business with a time-tested roadmap for success, accelerate your growth and earn revenue faster, and access a network of experts whose job is to help you prosper. It’s a proven way to truly be in business for yourself, not by yourself.
About the Author
Brandon Moxam is director of brand development at U.S. Lawns. Moxam brings potential new franchisees to the U.S. Lawns Home Office. He also looks for new partnerships he can forge to improve the lives of franchisees and add to the franchisee team of U.S. Lawns’ nationwide network. Brandon can be reached at email@example.com. Visit the U.S. Lawns web site at www.uslawns.com.