A check-list to launch your franchise
Many owners of a retail business that grows to a medium or large size are thinking about selling their own franchise. The scheme provides a lot of advantages for the franchisor — this seems to be evidenced by the number of companies offering their franchises. Kirill Popov, entrepreneur and co-founder of the interior design project ordering service, talks about the advantages and pitfalls of this process izidizi.com, formerly head of the Coffee Like chain and co-owner of the Laser Pro epilation salon chain, which is distributed throughout the franchise
Three facts that you need to know before you start your own franchise:
Developing your own network is more profitable than selling a franchise. If you can create your own branch network and have the money, strength and desire — it’s better to do it.
The franchisor will face a cash gap. Do not deceive yourself that you will spend 15 thousand rubles on advertising, sell the franchise, get a lump sum of 300 thousand rubles and stay with 285 thousand rubles of profit. A management company — a lawyer, accountant, marketer, copywriter, SMM analyst, and other specialists who serve the sale of franchises-requires a lot of expenses. It will take a long time before the flow of customers starts and you can earn royalties.
You need to understand the value of your product. Something that the franchisee will be happy to pay for. Can the product “unpack” without you? Today, more than 90% of franchise owners in the country don’t understand what they are selling, and I was one of them, too.
Stage 1. Evaluating your business
Evaluate your niche. Before offering your franchise to customers, conduct a competitive analysis. How profitable is the business sector in other cities where potential buyers may be? Find out your competitors offering similar franchises, their advantages and disadvantages, and pricing policy. How will you look against this background? Is there something to stand out? Look at your own business.
Signs of a product that can be packaged as a franchise:
Business age-1.5-2 years. In Coffee Like, we started selling franchises earlier, but I would recommend from a year. By this point, the business has time to go through several time cycles, recessions. The business model has time to form, and the first crisis passes. The franchisor himself understands with what UTP he can go out, what value he carries.
There is an uptrend in the niche. When we entered the epilation market, there was a trend — cosmetology clinics were opening. The service was gaining popularity in the regions. We opened three studios, worked for six months, and there were many competitors-then we realized that we need to scale quickly. This is easy to measure with the help of analytical agencies, social networks, and the Yandex service.Wordstat.
Restrictions on development in your region. If the market capacity does not allow you to grow in your home region, then one of the options for development is franchising. The presence of a promoted brand is an advantage that will allow you to sell the franchise more expensive. But you can do this for medium-sized companies, you just need to set an adequate price. When we created Coffee Like, we started selling franchises when we didn’t really set standards and business processes yet. All this was completed on the move. This can also be done, although it is a risky path. But this way you can fly very high in a short time. On the other hand, the longer the company is on the market, the more trust and the higher the value of the franchise for the client, the more expensive the lump-sum payment is.
Register the trademark. A prerequisite for creating a franchise is the presence of a registered trademark, so you will have to do it. Keep in mind that this will take about 9 months.
How much does it cost to pack a franchise?
The most important thing is to determine the product and its value. To move a resource through which you communicate with customers — CRM system, to set minimum advertising, test demand, whether a clear and marketable product, understand how much you’re willing to pay customer. There are agencies on the market that promise to “pack a franchise” and charge from 300 thousand to 1 million for their services, but I believe that an entrepreneur who wants to work with his product can conduct a test himself — it will take two weeks and 30-50 thousand rubles of the advertising budget.
If” packers ” of franchises appear on the horizon, this means that the product is raw, it is necessary to understand and develop it, and the business owner does not know why he needs a franchise and how to finalize the product.
Work out a unique trade offer. This is a spell that marketers do not get tired of saying, however, not everyone has it. Previously, the value was in the product itself; today, business is marketing. In order to formulate a USP, an entrepreneur needs to become a first-class marketer himself, or hire one.
To create an excellent UTP, we came to the five-question method:
What does your client buy?
Why is he buying this?
How can he buy your product?
Why can he buy it?
How much does it cost?
To find a unique answer to these questions, you will have to spend a lot of time and use well-known methods, which are developed quite a lot.
Stage 2. Preparing a package of documents
If you decide that the company is ready to create a franchise, here’s what you need to prepare:
Description of the enterprise concept with a dedicated UTP. This is one of the main documents. This is what salesmen will rely on when offering a franchise to potential customers.
Franchise agreement. It is necessary to ” run ” the text of the contract through several lawyers specializing in franchising.
Financial plan for yourself and for the franchisee, which will indicate the costs and revenue forecast, payback period.
Required permits from government agencies
Standards of work of the enterprise. Here, the main job is to understand how the product works and how to make money on it. Then it is necessary to describe it in a language that is clear to the audience. The clearer the communication, the more effective the franchise will be. Most often, the video format is suitable. Someone will be comfortable with webinars, and someone and texts. If this is an audience over 50-better audio. If you are younger than 24, for example, a bot in Whatsapp will work.
Presentation and other documents for sales managers.
Stage 3. Franchise sales
This will be a separate line of business. The sale of the franchise will follow the same pattern as the sale of the main product:
Think through and implement a promotion plan. Creation of UTP, advertising creatives, strategy development, ad delivery channels.
Create a website, connect a CRM system, I recommend AMO or Bitrix24 — the most convenient.
Configuring Analytics. This can be an individual or a program.
Running a test: the owner or marketer can do this: collect applications, process them, and ask customers how they feel about the product.
Add a funnel. For example: a potential client comes from instagram, goes to the site-this is reflected in the CRM system, the Manager calls the client, they send messages to him in Whatsapp, after a while there is another touch — for example, through an e-mail newsletter. The funnel must be constantly configured and optimized.
Scaling up successful strategies.
Stage 4. Working with franchisees
Training. In order to pass all the nuances of the business to the franchisee, you need to organize a training center. A convenient and economical solution — online school. The advantages are obvious: the franchisee can study without leaving their region, at a convenient time. But periodic meetings, excursions and master classes on the territory of your company are also not excluded — show your partners what your business is by example.
The most important thing is the quality of information and the simplicity of its delivery: more practice and Analytics, ready-made cases with their solution. The higher the status of the speaker, the better-the best way to do it is the head himself.
Control. The bad reputation of franchising as a phenomenon in Russia largely stems from the unfair use of purchased franchises. To ensure that standards are met, you can set up a control system. These may be strict terms of the contract, which provide for punishment for violations up to the deprivation of the franchise. You can collect information using external agents-secret guests, cameras, and outsourcing companies.