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Franchise Launch Checklist

Many owners of a retail business that grows to medium or large size are considering selling their own franchise. The scheme provides a lot of advantages for the franchisor – this seems to be indicated by the number of companies offering their franchises. The entrepreneur Kirill Popov, co-founder of the service for ordering interior design projects izidizi.com, talks about the advantages and pitfalls of this process, in the past – the head of the Coffee Like network and the co-owner of the franchise franchise chain of hair removal salons Laser Pro
Three facts to be aware of before starting your own franchise:

Developing your own network is more profitable than selling a franchise. If you can create your own branch network and have money, strength and desire – it is better to do it.

The franchisor will face a cash gap. You do not need to deceive yourself that you will spend 15 thousand rubles on advertising, sell the franchise, receive a lump-sum payment of 300 thousand rubles and stay with 285 thousand rubles profit. The management company requires a lot of money – a lawyer, accountant, marketer, copywriter, SMM-box, and other specialists who service franchise sales. Before the flow of buyers goes and you can earn on royalties, a lot of time will pass.

You need to understand the value of your product. What the franchisee will pay with joy. Can a product “unpack” without you? Today, more than 90% of franchise owners in the country do not understand what they are selling, and I was also one of them.

Stage 1. Assessment of your business

Rate your niche. Before offering your franchise to customers, do a competitive analysis. How profitable is the business in other cities where potential buyers can be? Find out your competitors offering similar franchises, their advantages and disadvantages, pricing. How will you look against this background? Is there anything to stand out from? Take a look at your own business.

Features of a product that can be packaged as a franchise:

The age of the business is 1.5–2 years. At Coffee Like, we started selling franchises earlier, but I would recommend from a year. At this point, the business manages to go through several time cycles, recessions. The business model has time to form; the first crisis is undergoing. The franchisor himself understands with what kind of USP it can go, what value it carries.

There is an uptrend in the niche. When we entered the hair removal market, there was a trend – cosmetology clinics were opening. The service has gained popularity in the regions. We opened three studios, worked for six months, many competitors appeared – then we realized that we needed to quickly scale. It is easy to measure using analytical agencies, social networks, Yandex.Wordstat service.

Development restrictions in your region. If the market capacity does not allow you to grow in your native region, then one of the development options is franchising. Having a promoted brand is an advantage that will allow you to sell the franchise more expensive. But you can do this for medium-sized companies, you just need to set an adequate price. When we created Coffee Like, we started selling franchises, when we ourselves didn’t really set standards and business processes. All this was completed on the go. This can also be done, although this is a risky way. But in this way you can fly up very high in a short time. On the other hand, the longer a company is on the market, the greater the trust and the higher the franchise value for a client, the higher the lump-sum payment.

Register a trademark. A prerequisite for creating a franchise is the presence of a registered trademark, so you have to do it. Keep in mind that this will take about 9 months.

How much does it cost to pack a franchise?

The most important thing is to decide on the product and its value. Transfer information to the resource through which you will communicate with customers — the CRM system, set up minimal advertising, check the demand, whether the product will be understood and in demand, and understand how much the customer is willing to pay. There are agencies on the market that promise to “pack a franchise” and charge between 300,000 and 1 million for their services, but I believe that an entrepreneur who wants to work with his product can do the test himself – it will take two weeks and 30- 50 thousand rubles of the advertising budget.

If “packers” of franchises appear on the horizon, this indicates that the product is raw, it is necessary to understand and develop it, and the business owner does not know why he needs a franchise and how to finalize the product.

Work out a unique selling proposition. This is a spell that marketers never tire of pronouncing, however, not everyone has it. Previously, the value was in the product itself; today, business is marketing. In order to formulate UTP, an entrepreneur himself needs to become a first-class marketer, or hire one.

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