Franchising Your Business
New Day Consulting Systems LLC helps you franchise your business. We assist you in taking your existing business and developing it into a national franchise systems. By doing so, you can substantially accelerate the growth of business units, human resources and financial resources for your business. Franchising is one method of business development that deals with a variety of business problems (money, people and growth) at the same time.
Historically, franchising has been means of distributing innovative products and services, like sewing machines, hair products, cars, food and beverage. All forms of franchising involve protected intellectual property whether a trademark, trade secret, patent or copyright. The distribution channel and the intellectual property provide possible revenue streams for franchisors and franchisees.
Franchise” is derived from the French word free or freedom. For many entrepreneurs, developing and buying a franchise has led to financial freedom for them and hundreds of thousands of franchisees. Franchising is simply a method of business growth and distribution. Franchising is a vehicle for marketing and distributing a business’s services or products through a network of affiliated businesses. Franchising has generally been placed in two (sometimes three) large categories:
Product Distribution Franchises
Business Format Franchises
Product distribution franchises are businesses that sell a company’s trademarked goods. Examples include gas stations, car dealerships and Coca-Cola. Business format franchises provide details about business operations. The franchisor asserts control over operations, licenses trademarks, provides marketing plans and manuals. Examples of business format franchises include hair salons, restaurants and education/learning enrichment centers.
In 1979, the U.S government regulated franchise sales through the Federal Trade Commission. And the FTC developed a rule that requires only pre-sale disclosure to prospective franchisees and does not govern the ongoing relationship with franchisees.
FTC Rule 436 legally defines a franchise. To be considered a franchise, a business must have:
Provide Significant Control or Assistance to Franchisee
Collect fees, royalties or other money from franchisees
If you meet the requirements of the rule, you are a franchise whether you intended to be or not.
When pondering whether or not to use franchising as a vehicle for business growth and expansion, several factors should be considered. A key listing of factors include, but are not limited to, the following factors:
Do you have a strong, proven leadership team?
Do you have an effective, profitable prototype?
Is your financial and business model profitable?
Is there a strong return on investment or ROI?
Do you have a clear, protected trademark?
Do you have other intellectual property like trade secrets, patents and copyrights that add value to the business and distinguish your business in the market?
Is there a demonstrated market for the goods and services?
Can the business be duplicated?
Are your supplier relationships strong?
Can you provide effective training and support to franchisees?
Can you comply with legal and regulatory requirements?
Do you have a national, regional and local marketing, PR and sales plan or strategy?
It is critical to your ability to franchise that you can answer yes to most of these questions before undertaking business expansion via the franchise method. New Day Consulting Systems, LLC can assist you in many of these areas and help you develop the systems you need in order to succeed. For more information about franchising, please download the Franchise 101 e-book located on the home page of the site.
Feel free to contact us to discuss your business to see if franchising is the right business vehicle expansion tool for you.