The Mechanics behind Turning Your Small Business into a Franchise - Baltic Master
The Mechanics behind Turning Your Small Business into a Franchise

The Mechanics behind Turning Your Small Business into a Franchise

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Most businesses in the UK have started to consider the opportunities and benefits franchising offers. Businesses that have expanded globally or are planning expansion can consider franchising as one of their potential growth strategies.

The process of turning a small business into a franchise starts long before the initial advertisements are out for acquiring potential franchisees. It is important that business owners gain complete information of franchising and its potential effects on the existing operation of the business. This information involves financial aspects as well as personal elements such as unique franchisor-franchisees relationship.

We recommend paying more focus on the personal elements since there is much more to building a successful franchise than just having a legal agreement. No matter what type of business you choose, your business is bound to change once you become a franchise.

Once your small business becomes a franchise, it will be more focused on recruiting, training, monitoring and motivating people who wish to run a business under your brand name, using your system and your business standards.

Your franchisees on the other hand would expect leadership and direction from you. Hence, as a business owner, you should look to extend help in the following scenarios:
        When they want to expand
        When they face cash flow issues
        Support with on-going training and marketing
        With product and service development, keep their business at the forefront of its marketplace
You are also expected to create and maintain business uniformity throughout your network. As promised, you are also expected to deliver these things to your potential franchisees.

If you think you and your business are ready for this fundamental change, let's look at the mechanism behind turning a small business into a franchise.

Five Star Franchising

There is no guarantee that every small business planning to turn into a franchise is going to be successful in doing so. This can happen due to several reasons. But if you want to create a successful franchise network of your brand, certain key elements need to be present. These key elements include:
        Your business should have a clearly defined brand image and system of operations (both at the branch and at the head office levels)
        Your business should have a proven and successful format appropriate for franchising and with a product and service that has stood or will potentially stand the test of time.
        Your business can be easily duplicated and can be easily learned by your franchisees
        Your business should earn enough profits to support both you and your network of franchisees.
        Your business should be able to or at least should possess the ability to adapt to a culture of mutual respect and support.
Moreover, everyone working in such an environment should have a sense of responsibility on how often and how well they will perform their obligations.

        Your business should have the ability to help the franchisees during financial issues. Guiding them towards suitable cash flow finance providers will not only help them sustain the business but also effectively manage their cash flow in future.

Image and System

A clearly defined image and system are collectively termed as intellectual property. It includes your brand name, the method of operation and the way in which the elements of your business come together to make up the franchise formula. What matters the most here is the way you have combined all these elements to create a successful business system.

The trademark or the brand name is entirely yours, as you will be licensing others to use it (regardless of whether the brand name is well known in the market or not).

All the elements of the package are explained in detail in the franchise manual. These elements include,
        The design and layout of the premises
        Marketing campaigns
        The accounting and administration
Moreover, it is the system which is mentioned in the manual that a franchisee agrees to operate on.

Proven Format

With the help of pilot operations you can prove that your concept works. This evidence of your success is enough to convince your first franchisee that they should choose your brand as a franchise.

Business owners should be prepared for the change that follows when a company turns into a franchise and must be able to run pilot units as soon as possible. The pilot units should mirror the proposed franchised outlets as far as possible with respect to its size, location, catchment area, population profile, staffing and more.  Moreover, you need to pilot your concept in two or three places for at least one complete trading cycle.

The main purpose behind the pilot operations is to see whether the concept you thought of theoretically works well practically. If the concept works well practically then you can adopt it into your operations before offering it to franchisees.

Additionally, pilot units also provide you with an opportunity to write the manual from the practical experiences rather than just stating the theory.

Easily Duplicated

If your business requires certain unusual conditions (for example, constant supply for fresh water), then it will be difficult to duplicate the sufficient number of support network.

Similarly, if your business needs special skills which most people do not possess, then your franchisees will not be able to learn or adapt to your business.

Hence, when franchising, think of it this way: the easier it is to duplicate and learn your business, the easier it will be to franchise it.


When we talk about profits and fees, we talk mainly about the structure of the franchise. Do not develop your franchise structure based on a similar functioning business and decide to charge the same franchise fees.

No matter what percentage your competitor business may be charging for their management services and advertising, the size of the mark-up they charge on supplies will definitely be different from that of your business.

Once you have sorted out whether your business is proven, easily duplicated and can be easily learned, you can then look at the structure of your franchise. This includes the size of the market, how many franchisees your business will need and the size of your outlet.

Later, as the number of franchisees required is decided, you need to decide what support staff and structure you are needed to recruit and support a network of that size. Next, you need to think whether the business can make enough to satisfy the franchisee and earn you a profit.

Such and many other considerations can be best discussed with someone that has expertise knowledge in franchising.

It is sensible to work on the franchisee’s finances at first. Since, if the budget they decide to work in does not work for them, it will never work for you. If the finances look good for the franchisee, then move on to work on your finances as a franchisor.

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