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Start Your Business Franchising

How to Turn Your Startup Into a Franchise

How to Turn Your Startup Into a Franchise
Credit: Manczurov/Shutterstock

As your small business grows, you may want to expand and share your products and services with a larger audience. However, if you don't have the time or desire to operate multiple locations on your own, you can turn your business into a franchise and let other aspiring entrepreneurs grow your existing business model for you.

"Most commonly, business owners want to franchise because it is an effective way to expand a business yet involves limited risk and less capital," said David Lopez, CEO and co-founder of Dental Fix Rx, a mobile dental-equipment repair-service franchise.

If your independent company is growing rapidly and you want to convert it to a franchise, here are some helpful hints from business experts who have done it. [Should you franchise your business? Ask yourself these questions first.]

While you likely researched your target consumers and location before opening your business, you'll need to investigate further to familiarize yourself with the world of franchising.

"A company that is franchised is built and operated entirely differently than most businesses," said Brian Tollefson, founder of Tikiz Shaved Ice & Ice Cream. "Before making the decision to franchise a concept, it's crucial to ... fully understand the franchise business model. Many don't realize the time commitment and effort it takes to franchise a company, in addition to the costs associated to properly do it."

Editor's note: Considering opening a franchise? If you're looking for information to help you choose the right one, use the questionnaire below to have our sister site provide you with information from a variety of vendors for free: 

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Rosalie Guillem, founder of the Le Macaron French Pastries franchise, noted a few must-haves before expanding your small business into a franchise, like "a superior and original product, an elegant design, flawless operations and exceptional customer service."

From there, you can evaluate your business's success before investing in other places.

"We studied the numbers [in our flagship location], compared them to new stores that opened and made adjustments in our franchise model accordingly," Guillem said. "Write down notes, findings and areas for improvement to perfect the process. This may result in several trials and errors, but the goal is to streamline and move on to opening a second location."

Once you feel prepared to expand, you can carry these lessons with and continue to make smart decisions for your company.

"When it comes time to open a second location, ensure the right managers and staff are hired to operate it efficiently," she said. "This provides an opportunity to trial your training process and make sure the business is duplicable for franchisees."

Don't take this journey alone. Lopez recommended hiring professionals who know the franchise landscape to help you out in the beginning.

"Hire a very good franchise attorney and an experienced franchise executive to assist you along the way," he said. "There are a lot of costly mistakes that can be made early on without these key players on your team."

This is especially true when creating your franchise disclosure document (FDD), which provides potential franchisees with everything they need to know about your company, your sales figures and other key business information.

"Franchise consultant groups will help with operations manuals, marketing tools, etc.," said Guillem. "Lawyers will advise in compiling a sound FDD and explain regulations that vary state by state – things small business owners don't have common knowledge on. Brokers will help your franchise grow with new owners. You may have a great idea for a franchise business, but it takes a team to grow that to reality."

As a franchise owner, you are responsible for marketing both your product to consumers and your business to prospective franchisees. Coming up with a solid marketing plan for both will keep you on track as you grow.

"Marketing in franchise sales is all about how many leads you can generate, the cost of the leads and how many you can convert," Lopez said. "It is very hard at first to figure out the proper marketing strategies to implement. This is something that improves over time, so it's important to not give up and [to] be patient."

"We prioritized and budgeted for marketing above all else," added Guillem. "We felt without proper marketing and awareness of our brand, we would not be able expand through franchising."

Tollefson advised franchisors to keep their business models as simple as possible, so they're easier for franchisees to understand.

"When marketing a new franchise concept, the more a prospective franchise partner has to grasp to understand the whole business model, the harder it will be to recruit good franchise partners," he said. "You will have a much better chance at succeeding if you fully understand what it takes to be a successful franchisor and to have successful franchisees."

Additional reporting by Nicole Fallon. Some source interviews were conducted for a previous version of this article.

Sammi Caramela

Sammi Caramela is a recent graduate of Rowan University, where she majored in writing arts and minored in journalism. She currently works as a Purch B2B staff writer while working on her first novel in her free time. Reach her by email, or check out her blog at sammisays.org.