Step 5: Considering whether to franchise your business

considering whether to franchise your business – Funding?

Step five when considering whether to franchise your business is to understand the funding requirements needed to make the franchise expansion model work. Generally, the funding requirement can be determined by a factor of how many franchise units you are aiming to open, each franchisee will typically have a marketing, sales and administrative cost associated with it. You can account for $3,000-$6,000 per franchise unit sold.

5. Your business should have access to expansion funds.

Generally speaking, the costs associated with franchise development have been grossly overstated by most consultants and industry professionals. You might have heard numbers such as $250,000 just to put the paperwork together and other far-reaching amounts. The fact is that the development work is only part of the equation, you certainly should factor in a budget to develop the appropriate operating manuals, training documentation, legal work and other franchise materials, but the costs associated with rolling out a successful franchise model are more related to the operational costs than start-up expenses. Franchising a start-up brand is a marketing and sales business. Without franchisees, the Franchisor has one focus entirely, find, retain and recruit new franchisees. It is a 100% sales and marketing effort that must have some capital behind it to generate the appropriate lead counts and brand awareness for the new franchise system. Luckily in today’s world of electronic mediums and cost effective marketing tools, Franchisors are provided the opportunity to sell franchises at lower costs per transaction than ever before.

Christopher Conner
Franchise Marketing Systems
[email protected]