How and when to franchise your business

6 min read
Ashliegh Gehl

It took a lot of hard work to get your small business to where it is today. You have loyal customers, a name people recognize and dedicated employees who believe in your company’s mission. You feel like you’re on top of the world. You’re even starting to think it might be a good time to franchise your business.

But how do you know for sure?

As Canadian NBA basketballer Andrew Wiggins once tweeted, “Only make moves when your heart’s in it.” You’ll know when the time is right to branch out and commit to expanding.

Start a franchise in 3 steps

Many, many businesses have grown from humble beginnings into national franchises. Here are the steps they followed.

  1. Map your vision.
  2. Create a framework.
  3. Rely on mentors, lawyers and financial gurus.

Before we walk through the steps, let’s touch quickly on how to tell if franchising is a good option for you now.

How to know when it’s time

There are a few common characteristics companies on the brink of franchising share. One sure sign is out-of-town customers repeatedly saying, “I wish I had a store like this in my city.”

If this flattering feedback is confirmed by the hard numbers coming from your customer relationship management (CRM) data or sales reports, it may be a sign that it’s time for you to franchise your business.

The second characteristic is internal.

Examine the business culture and operational processes you’ve created and ask yourself: can these be easily copied?

Franchise Your Business Cold Bottle of Beer

If the answer is a resounding yes, the next step is to look at your revenue and expenses. If you find these two elements are erratic, work toward smoothing them out before you consider franchising.

By looking at your business from various angles, you can assess if you’re ready to branch beyond your first store.

Taking to the streets

Thinking about taking your online store into the real world? It’s common for eStores to make the leap to a physical location to extend their online brands.

If you’d like to try this before you consider franchising, take a look at Frank And Oak. This Canadian company has grown immensely since its online startup days. Although it doesn’t appear to be a franchise, it’s a great example of a company that has successfully transitioned into a new realm, so take note.

What does it mean to be a franchise?

First and foremost, franchising is a way to distribute your products and services to a larger audience. As the franchisor, you grant a license to a franchisee for a fee.

Franchise Your Business Row of Bicycles

In turn, the franchisee gets to use your company’s trademark and corporate structure to establish their own business.

As part of this exchange, you receive royalties from the profit your franchises yield. This is why it’s important to know what revenue and expenses are foreseeable. It’s what a potential franchisee will want to know before buying in.

The Canadian Franchise Association is a great resource for turning your business into a franchise. They host seminars all across Canada and can help you discover if your business has what it takes to be franchised.

Becoming a franchise in 3 steps

If you think back to when you were starting your small business, there was a lot of planning involved. You dug deep to:

Becoming a franchise requires next-level strategy. And while your time is valuable, it’s the greatest investment you can make in ensuring your company moves forward.

1. Map your vision

The first decision is where you’d like your first franchise to be located. This is where your CRM data and market research can be extremely useful. You have the information at your fingertips.

Think five to seven years ahead.

How much growth would you like to see in that time? There’s some truth to the old proverb ‘slow and steady wins the race.’ The turtle may be slower than the hare, but it won the day by sticking to plan.

How fast you move is up to you. Just ensure that every move is strategic.

2. Create a framework

Consistency is paramount for a franchise’s success. It’s why you have repeat customers.

Think Tim Hortons, Canadian Tire and Booster Juice. Each company is extremely consistent; customers know exactly what to expect when they walk through the door.

Franchise Your Business Woman Eating McDonald’s Fries
The biggest franchises in the world started with just one very successful shop.

There’s a lot of behind-the-scenes work that contributes to the seamlessness we see when another Tim Hortons franchise is launched.

Document how you do what you do

Before you even make it public knowledge that you’re wanting to franchise your business, document how everything works from start to finish. This will become part of your franchisee operator’s manual.

It’s your job to make sure the new store looks and feels exactly like the original.

You should also ask yourself:

  • How do I want to be contacted by potential franchisees?
  • What is my selection criteria?

To give your franchisees an advantage, have them complete a required training program and provide them with a mission statement, operating manual and marketing materials such as your logo, ads and news releases.

3. Rely on mentors, lawyers and financial gurus

Finally, ask trusted professionals or turn to LinkedIn to find a company that has taken a similar path to the one you’d like to pursue. Be bold and reach out.

By speaking with someone about their franchise journey, you’ll learn about the hurdles they faced and how they overcame them.

Franchise Your Business Person Signing a Contract
Be sure to consult with lawyers and accountants as you create your franchise materials.

You’re also going to want an attorney to guide you through the Arthur Wishart Act Franchise Disclosure and review all of your legal materials, such as contracts and proposals.

Your accountant or financial advisor should be at the ready to read through various financial documents and provide advice as needed.

Franchise your business to grow

One of the first steps you can take to franchise your business is to put it under a lens to assess if it can be easily replicated. If the answer is yes, dig through your CRM data and conduct market research to decide where to locate your first franchise.

Be picky. Once you map your vision, find a mentor, attorney and financial advisor to step in when needed. Then create an operations manual that includes training and marketing materials and you’ll be well on your way to turning your small business into a remarkable franchise.

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