The franchising model is a very popular solution for successful business owners who have a desire to adopt a growth programme, increase brand awareness and boost geographic coverage. The franchisor (business owner) will offer the ability for franchisees to open their own locations and run their own business. The franchisee will become part of a successful brand and receive ongoing support, training and mentoring. It is an excellent solution for all to build harmonious partnerships and excellent growth potentials for both the franchisor and franchisees.
When a business does commit to a franchising programme there are several important costs which need to be accounted for:
Professional services – when franchising it is important to seek the advice and guidance of business specialists. Having correct legal processes, accurate business plans, reliable operational strategies and excellent training programmes are a must. However, it should never just be the responsibility of the franchise owner, instead seeking the services of professionals within these fields is critical to creating a successful franchising model.
Property – this will require a significant investment and will be one of the most important aspects for each franchise location. The facility needs to be modern, have excellent amenities and be in a perfect location. Of course, there are upfront costs for deposit following by monthly leasing or purchasing costs. There will also need to be some form of contingency to account for ongoing maintenance or upgrades that might need to be made.
Equipment – any new franchise will require several different items for start-up, this can include IT systems, machinery, furniture and kitchen appliances. Each franchise will be different so the requirement for equipment will be varied however there will be a number of items needed which again can be a drain on cash resources.
Sales & Marketing – the first 6 months of a new franchise are critical; most of its focus has to be on increasing brand awareness and making sure everybody is aware of the company and the benefits that it brings. Developing a sales and marketing plan which includes strategies for the best forms of promotion is very important. A key decision from the outset must be to allocate sufficient budget to make sure the franchise can commit suitable resources to promote, promote, promote.
There are some excellent growth benefits when franchising a business and it can be an exciting journey. By establishing the right foundations at the start with an accurate business plan and correct financial forecasting the business will be in the best position to achieve success.
To find out more about the benefits of franchising or if you have any question in regards to business planning or raising finances, please feel free to call us on 01993 706403 or e-mail hello@ngifranchisefunding.co.uk.