How to create a profitable franchise in 6 steps?

Why set up a franchise? According to 2019 figures, franchise sales are worth 67.8 billion euros on the French market. This success can be explained by the franchise model, which offers a win-win situation for both franchisee and franchisor.

Franchising is a model that's easy to reproduce, and is winning over more and more entrepreneurs. Let's take a look at the advantages and milestones of franchise creation, to help you develop your business.

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Why set up a franchise?

If you're an entrepreneur with a specific business concept, franchising can offer you a number of advantages:

• Duplication of your outlets: your franchisees will set up numerous outlets for you, so you don't have to invest in your own name,
• Increased sales: the more successful your franchisees are, the higher the royalties they pay you,
• Increased brand awareness: If your concept appeals to investors, you'll be able to attract franchisees more quickly, and improve your visibility with customers.

6 key steps to creating a profitable franchise

At this point, you know whether franchising is right for you. However, there are a number of steps you need to take to ensure that the creation of your franchise network goes off without a hitch.

1 - Be sure of your concept

To develop your franchise, you need to be confident in your concept. In other words, your business must have already proven itself by attracting a significant number of customers. If your business is in full expansion, then it makes sense to improve its reputation and location by creating a franchise.

Example: As soon as a concept works, proves its worth with consumers and becomes profitable, it's time to think about creating a franchise. One of the best-known examples is McDonald's, which went through several stages before becoming one of the world's best-known franchises:

1. From its inception in the 1950s, no one thought of turning it into a franchise. Once their concept was established, they analyzed the performance of the first restaurant.
2. The innovative concept of being able to serve a customer very quickly by producing the burgers in advance, before they were even sold, was extremely appealing to their clientele. Their added value was the reduction in waiting time once the order had been placed.
3. From then on, this model was exported across the U.S. via franchises, and then around the world, making it the success it is today.

2 - Carry out in-depth market research

If your concept is sufficiently solid and successful with many customers, it's always a good idea to carry out market research to ensure that developing a franchise around your concept is viable:

1. Analyze the competition: the products they sell, whether they are similar to yours, and what your positioning and differentiation will be to attract your new clientele.
2. Analyze your clientele: who are your products aimed at? Who are your personas?

To help you in this process, don't hesitate to contact specialized marketing firms. This will help you determine the type of location you need to set up in, and better define the profile of your ideal customer.

3 - Draw up a business plan

When starting up a franchise, your business plan is essential if you want to know whether your profitability will be significant.

It's the essential document if you need financing to develop your franchise. It's what will enable your future partners and franchisees to judge whether your franchise project is viable. It will also help convince the bank to grant you a loan.

What should your business plan contain?

• A presentation of your company and your franchise project,
• Analysis and study of the market in which your franchise will develop,
• The strategy employed for your franchise project,
• Presentation of the franchisee (s),
• The raison d'être of the franchise,
• Choice of legal form ,
• Financial forecasts.

4 - Protecting your brand

Under franchise agreements, your franchisees will have the right to use your intangible rights and processes. However, for a franchise agreement to be valid, your business must be legally protected. You must be able to prove to your future franchisees that you have registered your company's trademark with the French Institut National de la Propriété Industrielle(INPI).

5 - Draw up your franchise agreement

The franchise agreement will seal the deal between you and your franchisee. It will set out the financial obligations of both parties, as well as the procedures to be followed by the franchisee, from the presentation of premises to communications.

6 - Launch your franchise and train your franchisees

Once all these elements are in place, you can start building your franchise network. However, there are still a few points that are essential to the smooth running of your franchise.

Recruiting franchisees:

Choosing the right franchisee is vital to the success of your business, as it's the franchisee who will be responsible for ensuring that procedures are followed and enforced. It depends on the image of your franchise network.

Franchisee training and support

As a franchisor, you have a duty to train and support your franchisees. You need to prepare a training program for all franchisees joining your network, so that they know your concept, your products and your communications and marketing approach inside out.

Assistance and support for your franchisees

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This justifies the royalties you receive from them, and can take several forms:

• Up-to-date training,
• Recruitment support,
• Communications and marketing support,
• legal support, etc.

Franchising is a real opportunity for any business looking to expand. Now that you've familiarized yourself with the 6 steps to creating a successful franchise network, you're ready to increase your sales tenfold.