How to Franchise Your Business (Your First 5 Steps)

If you’ve landed on this page, it likely means you’ve wondered how to franchise your business in the last few weeks – and possibly for a while! 

First off – kudos to you! Franchising is a unique model to grow and scale your business and doing your research on how to do it properly means you are taking your business growth seriously.

When it comes to how to franchise your business, the first thing you need to do is really understand WHAT the franchise model is – so we will start with that!

Franchising is a way to scale a business that involves a franchisor (the person who starts the business, registers the trademark, and creates the operating procedures for the business) awarding franchise locations to franchisees (people who invest and pay specific fees to open and run their own locations in their local communities).

The team here at AC Inc are franchise growth experts and we help franchisors at all stages of growth to scale strategically and support their franchisees for success. 

We have business owners come to us often with the question of how to franchise. And one thing you’ll never hear us say? 

“You have to franchise right now”

Franchising is a very specific way to grow a business, one that involves a lot of people management, relationship building, systems, clear SOPs, an even clearer brand, and a lot of grit. 

This method of growth doesn’t work for every business owner – in fact – we convince a lot of business owners NOT to franchise!

But if franchising is a good model for you, we want to ensure you franchise RIGHT. 

Here are 5 steps to get you started, decide whether this is the right model for your business growth, decide whether you want to be a franchisor, and take your first steps to franchising your business!

1) Assess yourself and your business model

Your first step in answering how to franchise your business is to assess whether YOU have the DNA of a franchisor. If your personality isn’t a good fit, it will be very hard to succeed in this specific business growth model.

Ask yourself the following questions… 

  • Do you have a big vision for your business? 
  • Do you have a long-term growth mindset? 
  • Do you love working with people?
  • Are you a problem solver?
  • Do you want to start a whole new business?

The reason these questions are important is because when you franchise your business, you are now in the business of people. You are no longer in the business of hair studios, fitness, restaurant, etc.

After reflecting on yourself and whether you fit the role of a franchisor, the next part of assessing your business is to assess the business model itself. 

Ask yourself the following questions…

a) Do your metrics make sense? In your profit and loss statement is there room to take off 8% for royalties, 2% for ad fund, and enough left over for a solid salary? If not, it will not be an attractive model for a franchisee to invest in.

b) Does your brand stand out and have a differentiator? Look at whether your business model would thrive in a different market? Is there something unique about your brand that will attract new customers in different locations? 

c) Does your business have replicable systems? Can it be run successfully without YOU specifically? This is important because your business will be operated by different business owners who are not you so the systems need to work no matter who is operating in the location.

Psst… if you don’t know the answer to these questions… you can hop on a free initial call with our community manager, Jordan to discuss your business model and whether you are a good fit for franchising!

2) Get out of working IN your business

Something we see TOO many business owners NOT do when they start looking into how to franchise. Remember when we said you will be starting a totally new business when you start franchising? This is where that comes into play.

Taking time to stop working IN your business could look like hiring a manager to take over the day-to-day operations of your business or it could look like turning over more responsibilities to your existing manager.

However you choose to take a step away from the day-to-day operations, it is a necessary step towards franchising your business. Because the next step requires your time and energy to be put into establishing your systems and procedures.

3) Write out your SOPs 

Every franchise has an ops manual that outlines exactly how to successfully run the business. This guides all your franchisees in running their business and is a foundational piece of your franchise system!

Some people may advise you to reach out to a franchise lawyer or start attracting franchisees BEFORE putting together your ops manual, but we HIGHLY recommend taking the time to write down your SOPs first – before either of those other steps. 

Take some time to write down “How-Tos” for all areas of your business – how to hire people, what marketing tasks to do, how to order supplies, what partners you use, and the tools you need to get started…. EVERYTHING! 

Then lay out all your step-by-step instructions for each area of running your business. All of this work will serve as the first draft of your operations manual, and you will be so much better off when you start franchising to have done this work ahead of time.

4) Go to a Franchise Lawyer 

A necessary part of starting a franchise is finding a franchise lawyer to get yourself an FDD and a Franchise Agreement. If you are looking for lawyers we recommend, please book a free initial call with us here.

5) Find Franchisees

Only NOW after the 4 above steps do you start looking for franchisees. We have a blog post dedicated to some places to avoid, and some strategies that work well for finding your first 1-3 franchisees.

Read the blog post here.

Your first few franchisees will be a big advocate for your brand to all your following franchisees. A good path to follow is to find people who already love your brand, your story, and are passionate about your mission. This means finding someone in your network like your customers, clients, friends, family, and peers. 

Have more questions about franchise development and finding your first few franchisees? We discuss this and more in our free virtual AC Roundtables where emerging franchisors gather on zoom to collaborate and problem-solve together.

The AC Roundtables are a free resource we offer franchisors who are seeking collaboration and peer-to-peer learning. We’ve been running these virtual roundtables since 2020 and we always love to have new franchisors join us!

Try one of our free AC Roundtables