Facing New Franchisees

Signing new franchisee contracts, expanding the business at a fast pace looks quite exiting to everybody looking at franchise business. It is definitely exiting. However only franchisors know how many long hours they have invested in finding potential franchisees, how hard it was to land every new sale and how much more work is out there in keeping their franchisees happy and successful.

Franchise business, as easy as it seems, is not for everyone. Certain people just do not fit to be franchisors while others cannot manage to keep up with the effort required to get into the business and develop it into a prosperous empire.

One of the most difficult challenges every franchisor faces is convincing prospective franchisees that opening their franchise unit is a lucrative opportunity. The situation is complicated additionally by numerous Federal and state regulations that restrict franchisors to discuss certain topics with their franchisees prior to signing a franchise agreement. Here are a few of the questions a potential franchisee may ask you.

Frequently asked questions by potential franchisees and how to answer them.

• What profits I may expect after signing up with your franchise? Be very careful if you are asked such question as well as any question regarding money, revenues, profits or other financial matters. Federal and state regulations strictly forbid discussing potential revenues and profits with potential franchisees. Make sure your staff is well trained in this respect as failing to comply with franchising laws can end up in thousands of dollars in fees and even some personal penalties.

• What kind of support you provide your franchisees? Your prospective franchisee is looking for security. It is normal that they are concerned about the training and support they are going to receive. Do not underestimate this question as whether or not you will sign a contract may depend on your answer. Explain in details what training programs are available for your new franchisees and their staff and what support you are going to be providing them with along the way. Hand over some informational materials for further reading and leave a contact number for any future questions.

• What future equipment upgrades are you planning to have? Your prospective franchisees are aware of the fact that you have an ongoing fee for upgrades and improvements and want to know what they will get in exchange for their money. Even if you do not have such a fee, a future franchisee may still want to know what they will expect in terms of upgrades and in what timeframes. Transparency is the best policy here, even if you do not have planned any technological or equipment upgrades in the near future.

• Why I need to pay an initial franchise fee? Initial fees are, in eyes of people, a great deal of profit for franchisors. As a franchisor you are more than aware of the fact that this is not true. If you have an initial franchise fee, explain that it is there simply to cover your expenses for getting each sale.

How to Market Your Franchise Business

A franchise business cannot become successful or grow rapidly unless it is marketed well. No matter how good your products or services are, no matter how good operational systems you have in place, no matter how devoted your management team is, you will never succeed if you do not employ a good marketing strategy.

There are many ways to market a franchise business. The strategy that you are going to implement should suit your business type, match your goals and reach your prospective franchisees. Here are some tips that can help you reach these objectives.

Franchise marketing tips.

• Determine who your prospective franchisees are. Similar to determining who the prospective buyers of a product or a service are, you need to determine who is likely to be interested in your franchise. There are many different types of franchise buyers and you cannot target them all. Segmenting the market and finding your marketing niche will help you a lot when you start preparing your marketing plan. Do this well in advance so that you can be 100% ready when you launch your franchise.

• Work on your credibility. Regardless of how good your marketing strategy is, it will not bring you a lot of franchisees if you do not manage to make your business credible. There are many factors influencing business credibility – how long you have been into business, how large your company is, what the quality of your products or services is, do you have superb customer service practice and so on. Make sure these are reflected in every single part of your marketing strategy and advertising materials.

• Do not underestimate the power of advertising. There are many different channels of advertising. You can promote your franchise by distributing brochures, attending industry exhibitions, posting magazine and newspaper ads, creating advertising for television and radio, advertise online. You should not ignore even a single marketing channel. Of course this doesn’t mean that you should use all possible advertising channels or at least not at the same time. Which marketing strategy you will employ will depend on your prospective franchisees, your goals and your marketing budget. You should also research how your direct competitors are advertising and see if you can do better.

• Internet. Internet is presenting franchisors with unlimited marketing opportunities, often costing just a fraction of traditional advertising. Put some effort into exploring these opportunities – create a nice company websites, contribute content to industry related web portals or advertise online.

• Word of mouth. Definitely one of the most powerful marketing tools is word of mouth. A happy and successful franchisee is worth thousands of dollars into advertising. Try to keep positive and good relationship with your unit owners and you will quickly see a lot of applications for new franchises. You should also be able to supervise closely how your franchisees are running their units to make sure each one is keeping up to the standards of your name.

Keeping Franchisees Happy – the Secret for a Successful Franchise Business

Every successful franchise business stands on a successful relation between the franchisor and the franchisees. This relationship is largely dependant on the way the franchisor has set their business but it is also relies on the communication between the parties involved.

Positive and constructive communication is one of the fundamentals for any business partnership. Unfortunately in many occasions franchisors and franchisees alike fail to keep a nice and fruitful communication channels. After this happens it is a matter of time when problems will start to arise. Strangely enough, a large amount of arguments and difficulties may be easily predicted and overcomes before they have even happened. All thanks to communication.

How to overcome this, at a first glance, easy challenge? The best way to overcome them is by seeking the roots of the problems. Here are some tips that may help you.

Franchise – franchisee relationship communication.

• Do not let yourself down the slippery road. Many franchise owners fail to notice problems until it is too late. And even than, they fail to recognize the real reason for the troubles they are experiencing with a certain franchisee. The first call to action is to get in touch with their legal advisor and look at the franchise agreement about ways to terminate the contract. And let’s face it – this is not a positive turn around for neither of the sides involved in the process.

• Step into your franchisees shoes. Many of the misunderstandings arising between franchisors and franchisees are actually “provoked” by franchisors themselves. A common reasons for conflicts is when the franchisee thinks the franchisor should do something but the franchisor doesn’t The actual “doing” may be just about anything – from increasing advertising to reducing the royalties on some products. Whatever the case you, as a franchisor should be proactive. Keep the communication line open, detect problems early note and real. It doesn’t mean you need to agree with everything your franchisees want, but at least you will be able to address the issues early enough and settle one way or another.

• Money troubles. Definitely the most frequent arguments between franchisees and franchisors are related to money. When a franchisee doesn’t seem to take off to start making money or when a franchisee stops to be profitable, franchisors simply pick up the phone and call their layers. Of course it would be quite unpopular decision to keep an unprofitable franchisee however you may want to look for the reasons why this is happening. Better yet, you may want to be able to detect that money problems are raising on the horizon for any of your franchisees. Saving a franchise unit, after all, means more profits for you.

• The flat line. There are cases when, whatever you do, no matter how proactive you were or how good the communication was between your franchisee and you, the business relationship has to come to an end. Make sure you are able to recognize these cases and close the unit down with minimum drama.

Challenge Your Franchisor Problems

Every day thousands of franchise owners experience the same problems and worries. Some of these challenges are pretty easy to overcome while other require a serious approach and hard work.

Detecting a problem is always the first step required to successful solution. Many franchisors fail here – they are either unable to detect the real cause for the problem or don’t address it in an appropriate way. Here is a selection of some of the most notorious franchisor problems along with the most appropriate solution for each one.

A list if franchisor problems and how to challenge them.

• Royalties payments. Many franchise business owners find it really difficult to control their royalty payments. Usually they need to way until the end of time, see the sales information of each store, calculate the royalties and than wait for payments to be made. If there is a large number of units, checking them all may really become problematic. A good way out of this is to try systemizing and unifying things as much as you can. Start to use software that will help you compile sales data and track payments.

• Communication. Often franchise owners feel their franchisees are reluctant to communicate effectively. Even if they can sense the problem, it is somehow impossible to open a good line of communication with the franchise unit owners. This problem can quickly lead to a business disaster. The solution is quite simple. You should train all your personnel to be able to detect some of the most common problems a franchisee may experience and approach them for a discussion and advice. If this doesn’t work you should be able to step in and open a conversation with any of your unit owners. Another approach is to use the services of a franchise counsel. These services have becoming very popular and they can really help when communication issues appear.

• Poor sales. If you detect that the sales of any of your franchisee have dropped, you need to step in and take action right away. There may be several reasons why this particular unit is not performing. The reason may be connected with competition, with poor customer management, poor product quality and so on. While the competition factor is somehow hard to tackle, the other two reasons actually point to incompliance with the franchisor operations manual and your business practices. Don’t jump to any conclusions before you reach the root of the problem. For example if your franchisee has lowered customer service, you need to try to understand what led to this situation rather than just shut the unit down.

There are much more potential problems a franchise owner could face. Rather than seeking ready made solutions, franchisors should learn how to prevent problems from occurring and how to tackle the issue in the best possible way. The strongest weapons in battling problems are the ability to detect problems early on, to teach your team to take action as soon as the problem arise, help all franchisee unit to perform as best as they can.

Franchise Disclosure Agreement Update Tips

The franchise disclosure agreement is the backbone document of all franchise operations and procedures. It is this document that guarantees your business is managed just the way you want by all of the franchisee partners as well as protects your business identity.

Preparing the franchise disclosure agreement is not an easy task. Apart from the fact that the document must address a lot of important issues, there are also some state and federal regulations that must be covered. This is why even experiences professionals often seek the help of franchise consultants and lawyers when writing or updating their franchise disclosure agreements.

Updating your franchise disclosure documents is also quite challenging. If need to update your franchise agreement, you surely can use some help. Here are a few useful tips that can help you throughout the process.

The most important aspects of updating a franchise disclosure agreement.

• Check federal and state regulations. The first thing to do when preparing or updating a franchise disclosure agreement is to check the federal and state regulations. Although you may still need to get the agreement reviewed by a legal consultant, this will help you write it or update it without missing any important details. There are many laws governing franchise operations. Although they may differ from state to state, in general you will need to update the agreement 120 days after the first year and than annually. Missing the state regulated deadlines can result in big troubles and huge penalties so check these as well.

• Check which parts of the agreement must be updated. There are some parts of the disclosure agreement that you will need to update even if there are no changes in the way your company works. For example you need to update item 2 for any changes in the key management, item 3 concerning litigation, item 4 – bankruptcy. You need to update the chapters concerning your opening costs based on recent expenses, the chapter regarding payments to suppliers, items regarding trademark and infringement information and the items concerning lists of existing outlets and terminations. All franchisee disclosure forms should also be updated.

• The annual audit. Each update should be accompanied by an annual audit. Call your audit partners as early as possible as leaving this for the last moment usually results in missed deadlines.

• Take advantage of the update. Updating the agreement is a real burden but it is also provides a great opportunity to review closely some of your operations. You are digging in forms and documents so you can easily go through all your franchise units contracts and check if any updates are needed there too. You can do the same with contracts you have with suppliers or other business partners. While updating the trademark section of the disclosure agreement, check the documents that concern protecting your grand names and logos and file or renew any applications to protect existing or new logos, brand names, trade marks or patents.

How to Write a Franchise Operations Manual

The franchise operations manual is one of the most important documents for any franchise business. It can make the difference between a successful and profitable franchise and a poor performing one.

Writing your franchise operations manual can be a frustrating task, especially if you are new to this business. Here are some tips that can help you throughout the process.

Franchise operation manual tips:

• Get ready. If you have never written a franchise operation manual, you will need to get familiar with the document prior to writing one. Of course every business is unique and there are different business procedures in every company. However you do not need to get into details at this stage. All you need to do is to get familiar with this type of documentation. Find as many operations manuals as you can and read them carefully. Pay close attention to their structure, the information listed and make notes about the most important details. Try to get franchise operations manuals of successful franchises and such that have businesses similar to yours.

• The first draft. After you have an idea what a franchise operation manual is you can proceed to writing the first draft of your own manual. As you have already noticed, the manual can be a bulky document so you will probably need a lot of time outlining all the information and even more time writing the details. This is where a specialized franchise tool can help you. There are some great software products that can provide you with the main frame of your manual. If you choose to use such software, all you will need to do is to customize the ready template.

• Get the draft reviewed. Once you have your franchise operations manual draft ready, you can get it reviewed by other members of the management team. Your management team is the people who know most about the business and each member of the team can contribute to the writing process. In addition, having the manual read by many people will help you a lot in refining it and making it better.

• Get the second draft reviewed by professionals. Once you have an almost ready version of the manual, get a legal professional to review it. This is very useful especially in cases when you are aiming to get franchisees from many different countries. A legal processional specializing in franchising will be able to point out any weak sides of the manual as well as fill any holes that may arise from a legal point of view. You can also get a franchise consultant to review the manual. This step is recommended especially if it is your first franchise business and this is the first time you are preparing such document.

• Make it official. Once you have the second draft ready, apply the final corrections and make the official version of the franchise operations manual. Remember that you may need to review it and change it on a regular basis as your business develops and the market changes.

Franchise Tools That Can Ease Your Daily Work

While many believe owning a franchise business is just a piece of cake while the franchisees are pulling the real load, they are very wrong. Establishing a franchise and making it successful and profitable a challenge. There are so many issues to address and so many things to take care of that the full scope of work can make your head spin. Most franchise owners work day in and day out long hours managing their business.

A franchise business owner has to address many issues – does the system is working smoothly, does all franchisees are following strictly the company procedures, are they profitable and so on. In addition a franchise owner should always look for selling new franchise units, which ultimately leads to more work. Luckily there are some franchise tools that can greatly reduce the load of your shoulders.

Franchise tools that can help run a franchise business

There are several tools developed especially for franchise business owners that can greatly reduce their every day work.

Paperwork is usually one of the biggest troubles for any business owner. This is where products like Franzoom Disclosure Document tool can help you significantly. Such tools have the most important set of documents – the franchise disclosure agreement, done and ready to be customized to perfectly fit your operation requirements. Moreover owning such franchising tools can give you piece of mind that you are updated with the latest Federal Trade Commission regulations.

Other useful franchising tools are those designed to help franchisors create the so called “holy grail” of any franchise business – the operations manual. While writing this bulky document sounds easy, in reality it is a challenging task. A professionally written operational manual should contain a lot of information and cover all possible situations. This document not only outlines the way each of the franchise units must execute their operations but protects your business and controls the quality standards throughout your franchisees network. A franchise operational manual should be regularly reviewed especially when you are planning to expand your franchise. Franchise tools such as Franzoom Franchise Operations Manual can really help you creating and maintaining a professional operational manual.

There are many other franchise tools that can ease the everyday work of any franchise owner. Tools that can help protect your intellectual property, assess the viability of any potential franchise request, make background checks or keep you on track with current state franchise regulations can be real time savers.

Reading all of the above certainly brings a lot of questions to your mind and probably the predominant one is “How much would these franchise tools cost me?” Money always matters especially in times of bad economy. The good side of things is that there are some very affordable franchise tools Moreover if you choose to by franchise tool kits rather than purchasing tools one by one you can actually save a great deal of money. Additionally using specialized franchise tools will actually reduce the workload and you will be able to expand your business without expanding your workforce.

5 Steps to Help You Expand Your Franchise Business

Establishing your franchise business, assuring its smooth operating and profitability is definitely a challenge. Expanding it to its optimum limits however is what many dream of since day one. How you can expand your franchise business and bring in its optimum amount of franchisee units? Here are five easy steps that can help you out through the process.

How to expand your franchise business:

1. Review your current situation. The fact that your franchise business is running smoothly with the current number of franchisees that you have doesn’t necessarily mean you are ready to expand your franchise business. Review all your documents and make sure they can hold the pressure of a larger number of units. Remember – controlling the operations of a few franchisees is absolutely not the same as controlling a big network of units. Double check all your legal documents and operational manuals and make sure there are no gaps in any of them.

2. Are you ready to compete? Once you make sure your business has the stable foundation to expand, check your competition. Having a small, local franchise business differs drastically from having a large, national or international network. Is your branding name and logos good enough? Are the products or services you sell competitive enough? Can you do better? Are your branding materials and products suitable for the new markets you are aiming at (especially if you are going international)? Getting these issues sorted out was crucial when you were launching your business and they will be crucial when you decide to expand your franchise.

3. Money matters. Money is always an issue to address. You may not need the same amount of money that you needed when you first started, however getting new business will require some additional expenses. In addition you should plan ahead any future expenses for extra office or storage space, new employees and office equipment and so on. If you don’t have enough resources to support an expansion check bank loans way in advance.

4. Set goals. Set realistic goals about how your franchise business will expand. How many new franchise units you want to have opened by the end of the month? After 3 months? By the end of the year? A goal orientated attitude will not only provide the frame for your expansion but will help you quickly review your progress. Remember – you must be realistic in your expectations and set realistic goals.

5. Push on marketing. Once you have all well thought of and prepared, push on your marketing. Your marketing efforts should be consistent with your expansion plan. Advertise in areas where you want to get new business, think of clever ways to get to your prospective partners. Good advertising strategies not always require fat marketing budgets so try to be creative and inventive rather than pour hundreds into traditional marketing. If you feel this is a hard task to do yourself, get an experienced marketer to help you set things up.

How to Prepare a Franchise Operating Manual

The franchise operating manual is the heart of any successful franchise business. This is one of the fundamental documents that blueprints the way every single operation in the franchise is executed. This manual should be prepared before your franchise business launches and can be refined as many times as needed along the way.

Writing a good franchise operation manual can be a challenging task. There are a lot of potential difficulties you may face especially if this is your first time writing similar documents. Here are a few tips that should help you get started.

How to prepare a good franchise operating manual:

• Keep in mind that the manual you are writing is like the Bible for your franchise business – it should include a detailed description of all good practices as well as information about the way every single aspect of the business operations. Make sure you have included all important details n the manual.
• Use simple, understandable language. This will ensure that the franchisees can understand what is written in the franchise operating manual.
  Write the manual in a way that you can edit and build upon later on. This is one of the documents that should change as the business grows and as business environment changes.
• If you are planning to grow internationally, you should take into account any local differences. You may need to prepare a different franchise operating manual for each one of the countries where you intend to grow.
• Get the manual reviewed by a qualified attorney or other legal consultant specializing in franchise issues. Once again, if you plan to expand internationally, make sure your overseas manuals are compliant with local laws and regulations.

After we have covered the main points that you need to keep in mind, let’s see which the main parts of any franchise operating manual are.

The nondisclosure agreement (NDA). This is one of the backbones of your franchise business. The agreement basically governs how confidential material, knowledge and information should be handled by the franchisees.

Timetable. The timetable is another fundamental part of your franchise operating manual. This is the section that explains the stages before a franchisee opens their business. For example this section may states what should happen 2 months before opening, 1 month before opening, 3 weeks before opening and so on. There is no standard way of compiling this section and you should tailor it according your type of business and requirements.

Staff policies. This section describes the way the franchisee will work – it covers everything from the way the business environment should look to working times and hygiene requirements. The office equipment and inventory can be included in this part of the franchise operating manual or in a stand alone section.

Business processes. This section of the franchise operating manual governs the way the business is executed. Working times, housekeeping, duties of the staff, inventory and equipment management, security and safety procedures are all described in this section.

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