All about Franchising

Franchise Development - Franchising your business can be a great way to grow your business using other people's resources and without using your own capital. At Billmar Consulting we have a Franchise Development model which starts with a feasibility study and takes you right through to the recruitment of your franchisees.

What is Franchising?

Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.
The British Franchise Association

So what does that actually mean for you as the business owner?

Franchising can be described as a "partnership model" between a "franchisor" (the business owner) and a "franchisee" (an individual who wants to have their own business with the support of a larger business with a proven and successful business model, systems and processes).

The Franchisee pays you an initial investment for the licensed rights to operate under your brand. They receive training and ongoing support from you to help them launch, develop and grow their business. They would also expect to pay you a management services fee/royalty payment which would normally be a percentage of their turnover but could also be a fixed payment. In addition to this you may receive a monthly marketing levy which you would use to market and develop your brand nationally. Their business will be a "mini- me" version of yours and will typically operate within a defined and usually exclusive territory. The partnership is governed by a Franchise Agreement which protects your brand and provides all parties with clarity as to what is expected of them along with the rules for operating and selling the business.

Why Franchise your Business?

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It would be fair to say that most businesses could be franchised. If your business is proven, profitable and portable (can be taught and replicated nationally) then you have ticked the first box. However, franchising is not for everyone and not all businesses can be franchised successfully. Step one is to make sure franchising is right for you and your business. It is a growth strategy, not a get rich quick scheme. However done properly it can provide an excellent platform to grow your business nationally and internationally.

There are a number of benefits to franchising your business. Although not exhaustive the following will give you some idea as to the benefits available;

Growth quicker & cheaper than "organic growth" - When you franchise you grow your business using the capital and resources of the franchisees. This enables you to grow without the capital burden required to purchase multiple units and employ staff.

Motivated people - There is nothing more motivating than knowing if you don't make a success of your business you won't earn any money. Your franchisees are more likely to go that extra mile, open that little bit longer and try that little bit harder that employed staff.

Brand development & consistency - Having a network of franchisees will develop brand recognition throughout the UK or even internationally. Having a robust Franchise Agreement and business model (known as your blueprint) will ensure you have brand consistency throughout your network.

Less hassle - You are responsible for supporting and mentoring your franchisees. However they are responsible for their staff which means that all the day to day challenges that come with having staff are down to the franchisees to deal with and not you.

Increased buying power - the bigger you network becomes the greater your need for product (assuming your business purchases from manufactures) this will give you more buying power and drive down the cost of your products or increase your profit margin.

How to Franchise Your Business?

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So where do you start? At Billmar Consulting we have developed a model which takes you from the initial question - Is this for me? right through to the recruitment of your franchisees. We don't just tell you what to do we do a great deal of it for you/with you. Our model is broken down into 5 phases;

Phases 1 - 4 are about preparing your core business and ultimately your franchise business ready to present it to potential franchisees.

Phase 5 is about recruiting your franchisees.

What does that mean?

By the end of phase 4

  • Your core business will be "franchise ready".
  • Your franchise proposition will be developed.
  • Pilot phase will be complete.
  • All your documentation will be prepared.
  • You will have defined your "successful franchisee profile."
  • Your marketing strategy will be in place.
  • The proposition will be presented to a high street Bank to secure confirmation of funding support for potential franchisees.

Phase 1 - Initial feasibility study. This phase is about assessing whether or not franchising is the right growth strategy for you. If together we decide that franchising is right for you we will work together to develop your franchise business and project plan.

Phase 2 - Preparing the core business. You've probably heard it said that a house looks its very best just before the owners put it on the market. Franchising your business is similar, getting your business into the best possible shape before you offer franchisees the opportunity to invest and replicate what you do will ensure you are making the most of the financial opportunity available to you. This phase focuses on your core business to ensure that your franchisees and have a model that is at its most efficient and profitable.

Phase 3 - Preparing and testing your franchise proposition Up until the point of franchising your business you competitors are likely to be other suppliers of similar products and services to you. However when you franchise you introduce new competitors to your world. That is, the other franchises in the market. This phase is about developing a franchise proposition that will make you stand out and attract the right type of individuals. Once you have developed your franchise proposition you need to test it. Your pilot operation will allow you to get a temperature check on what you are offering and also test your franchise systems, processes and support systems prior to rolling it out nationally.

Phase 4 - Preparing the documentation There are a number of documents that need to be in place prior to launching your franchise. We will guide you through what is required and in many cases write them for you/with you. The following list will give you a flavour of the type of documentation required;

  • Franchise advert
  • Franchise prospectus
  • Discovery day hands outs and presentation
  • Financial illustrations for issue to prospective franchisees
  • Operations manual
  • Training material
  • Franchise agreement

Phase 5 - Develop franchise network You are now ready to launch your franchise. This phase is about recruiting your franchisees. One of the critical success factors for your franchise will be to recruit individuals with the right attitude and skill set to ensure the success of their business and yours. At Billmar we have developed comprehensive recruitment strategies. We can train you in how to do it yourself or we can do it for you.

Improving your Franchise Network Performance

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Your franchise journey will take you through a number of different phases in your growth cycle.

Early years - At this point you will have a small number of franchisees in the early stages of their business requiring hands on support from you. You will also be recruiting new franchisees and continuing to run and manage you core business. At Billmar we have support services available to help spread the load and ensure you manage to keep all the balls in the air while you grow your business.

Mid - sized franchise - It is important that you continue to motivate your franchisees and create a community spirit throughout the network. We have proven initiatives that can help you with this.

Established Franchise - As your franchise network becomes more established you may want to implement new strategies to make sure each franchisee is performing to the best of their ability. The more they earn the more you earn too. We can offer support using our performance improvement /enhancement models to help you manage your franchise network through the different stages of its development and at the same time develop strong and sustainable relationships with your franchisees.