8 Things to Do Before Franchising a Business

Are you considering franchising a business? Do you want to learn what you need to do before you write franchise development strategies? 



In 2018, there were around 758,000 franchise establishments in North America. If you also dream of spreading your brand throughout the continent, why not start a franchise. Before you do, read our guide on the things you must do before you become a franchisor.

1. Research and Educate Yourself

All businesspersons must first educate themselves about the industry. You, too, should gather all the information you can about franchising a business. Start with yourself and test your personality with some hard questions.

Are you the type of person who likes to experiment with new recipes and creates franchise development strategies? Other than being an original creator, are you a natural leader? If you are, then you likely have what it takes to be a franchisor.

Following rules also makes you a better implementer and franchisee. If you assess yourself and find that you want to be a franchisee instead, this isn’t the guide for you.

2. Understand the Costs and Prepare Your Budget

Next, you need to learn if you have the capital to fund the cost of being a franchisor. Funding a business is different from franchising a business. You’ll have to pay plenty of fees as you go through each stage of the franchise development process.

The estimated cost of franchising a business is between $18,500 and $84,500. These costs will differ depending on your industry, level of support, and franchise sales team.

The filing and registration fees alone can cost you $1,000 to $4,500. This process includes an incorporation fee, USPTO filing fees, and FDD registration fees.

For the first year of your franchise business, you need to have at least $22,500 to $75,500. Even when franchisees buy from you, it won’t be enough to cover your start-up costs.

A good step to take before you franchise your business is to create a balanced funding plan.

3. Know Your Market and Franchisability

The next thing you need to know is whether your franchise will sell well. Is your business franchisable, and is it ready for franchising? You can determine this by looking at the success and scalability of your business.

You need to pin down the systems and learn how that made your business successful. Duplicate this knowledge and systems for your franchisee partners. In this way, the franchisee and the franchise can find success with as much ease as well.

The scalability of your business is a factor that will determine if you can franchise it. Can you develop systems to support franchisees and ensure they maintain quality consistency? You also need to give franchisees the support they need for their daily operations.

Is your market or the demands for your products/services large enough? You need to make sure that the people around you want to become franchisees. Knowing your market is one more way to tell if your franchise will become successful.

4. Gather Experience and Insider Information About Franchising a Business

Experience is the best teacher, but what will you do if you don’t have it yet? An excellent alternative is the experience of others. Talk to other franchisors and learn from them.

If you’re close friends with a seasoned franchisor, it’ll be easier to learn about franchising from them. Ask about how their experiences when they first became a franchisor.

You should also ask about any mistakes you should avoid as a new franchisor. Were there things that they wished they knew before they franchised their business?

5. Gather a Team

An important part of your franchise business plan is to keep a successful team in place. The team should be able to provide education and training to franchisees. The team also must have access to the tools that a franchisee may need when they buy your franchise.

Your franchise team will also give franchisees the support and guidance they’ll need to find success. Your team may also include a legal advisor to give you and franchisees legal aid when it’s needed. It also helps to keep a public relations and marketing expert around in offering help in those areas.

If you don’t have the budget to hire an in-house team, consider outsourcing. Outsourcing refers to hiring from a different company to help you with your business. 

6. Make a Cost/Benefits List and Analyze It

Before you start the franchise sales process, take a look at the costs and benefits of franchising a business. Make a cost-benefit analysis. Given how expensive it is to start a franchise, look not only at the short-term but also at the long-term analysis.

A cost-benefit analysis will give you a realistic view of your business plans. Often, it’s easy and fun to let your imagination take you to the ideal future where success is your fate. A cost-benefit analysis can also help you in decision-making and other business situations.

7. When Franchising a Business, Consider the Time You Need to Invest

Look back to how you started when you began your business. How much time did it take you to build a successful business? When you become a franchisor, you need to make sure you can still give as much time and attention to the franchise.

Selling a franchise to a franchisee alone can take 6 to 12 months. Often, the time will differ depending on the franchise and the processes involved. Imagine how much time you’ll need to give each franchisee if you’ve got a line of them waiting to buy from your franchise.

8. Keep Your Eye Trained on the End Game

Finally, focus on your goals so you don’t lose track of your best path to success. Before you search “how to franchise my business” on Google, take a step back and focus on your end game.

What do you want to accomplish other than to spread your brand? What is your goal in franchising a business? Keeping an eye on your goals can help you avoid getting sidetracked or lost in the process. 

Start Franchising Your Business Today

These things will help you out when you’re franchising a business. Keep these things in mind before you dive into franchising. 

Do you need help with franchise sales organizations and outsourcing? If you need an agency for franchise sales outsourcing, visit our contact page today.