Franchising 101 July/August 2022 Resource Articles Ultimate Guide to Buying a Franchise

The Process of Owning a Franchise

Franchising is a great way to make your dreams of owning a business come true, but there are several essential items to consider before putting pen to paper. Carrying out proper due diligence ensures the success of a business and signing the franchise agreement is only the beginning of the work needed to get a franchise started.

Here, you’ll find the list of steps that franchisees normally take before opening their own business to the public. These steps begin after signing the franchise agreement, and take business owners on the path to the grand opening day, when they can begin serving their customers and community.

Site selection:

Finding the perfect location in a community ensures that a franchisee can reach a steady and loyal clientele in their community. The site selection process can work differently across different brands. For example, if the site has been secured prior to signing the franchise agreement, the site details will be included in the franchise disclosure document. These details include demographics, traffic counts, information from the landlord, and any other relevant information pertaining to the location.

If the site has yet to be selected, the franchisee may sign a commitment agreement instead of a franchise agreement, and then the site selection process will take place. When the site is found, they will then sign the franchise agreement, which will include the site details. Alternatively, some franchisees will sign the franchise agreement before the site is selected, and when the site is found, will sign an addendum outlining the location details.

In either case, the franchisee will receive a new disclosure document including the site details, and will sign the acknowledgement of receipt for the site. After that comes signing the lease, or a sub-lease if the location will be rented by the brand’s head office.

If the franchisee is responsible for building out their new location, they will look to hire a local engineer or architect who ideally has experience with building a similar type of business in their community. This ensures that the builder has knowledge of the building requirements according to their municipality.

As the site is under construction, the franchisee will be working with the architect, the engineer, the general contractor, and the various tradespeople to get the site built to the specifications outlined by the franchisor. The next step is to start to work with the franchisor to hire staff and ensure the key staff are trained.

Hiring:

As small business owners, franchisees are responsible for staffing, and get the final say in who they hire to join their new team. However, the hiring process can vary depending on the company involved. A franchisor may provide general advice and hiring criteria to look for, such as the type of experience a prospective employee should have. In other situations, a job fair can be used for the hiring process, which will consist of the franchisee and a team member from head office interviewing candidates together.

The hiring process is vital for franchisees because they should onboard staff who will represent their brand respectfully while helping to grow the business by providing excellent customer service and building repeat clientele.

As franchisees make the staffing decisions, they are also responsible for keeping the ship afloat and ensuring that their staff numbers are maintained, and team members are satisfied. This includes making important decisions regarding training, disciplining, firing, and wages while ensuring that they are not under or overstaffed.

Additionally, as a small business owner, a franchisee should be educated in the provincial employment standards and labour laws that outline how much their employees are legally entitled to earn. Wages are more than just the pay cheque that employees receive, and include taxes, benefits, and workers compensation.

Training:

The training process kicks off when the franchisee attends and graduates from training school with the franchise brand. This can last from a few days to a number of weeks or months, depending on the industry and size of the brand. The next step is to train the franchisee’s employee team up to the standards and guidelines of the brand. This is usually done by the franchisor, who has a training team that will go on site to educate the new staff about day-to-day operations and policies. This can take from one week up to one month.

Most often, brands use a “train the trainer” technique, which consists of selecting key staff members to train, who then use their learning to educate the rest of the team.

Training is all done before the grand opening, during which time supplies will be continuously arriving to the site. The staff and training team should work together to organize the location and get it ready for the big day. Once the employees start working, it’s up to the franchisee and their key staff, often the manager and/or assistant manager, to provide guidance and support to their team about how to operate, rather than the franchisor being on-site to oversee operations.

The goal of training is to ensure that customers receive the same experience and high-quality product that they know and love at every franchised location. Thorough training equips franchisees and their team with the knowledge of the brand that they can replicate to provide successful results for their business.

Marketing:

To ensure continued success, franchisees will need to work with the franchisor to make sure that a strong marketing plan is in place for their location.

Larger brands normally have a national advertising and marketing plan created by the head office team in collaboration with their Franchise Advisory Council (FAC). The franchisee is typically responsible for their own local store marketing, as they will have a connection to their community. An established franchisor will often provide franchisees with a local store marketing tool kit, which can typically be accessed through the franchisee intranet. This tool kit can include checklist items to complete such as approaching a local school to set up a new program or joining a Business Improvement Association on behalf of the brand.

When it comes to smaller brands, there will generally be more collaboration between the franchisor and franchisee to come up with a marketing plan that will work for the franchisee’s location.

While it’s ultimately up to the franchisee to create their local store marketing plan, head office can also provide assistance. For example, they can send someone trained in operations or local store marketing to the location for a day to help with community outreach programs and other marketing techniques.

Additionally, a marketing manager can work with business owners to create a grand opening plan, including organizing a “Friends and Family” event before opening to increase customer outreach.

It’s important to remember that every franchise is unique and may have different steps, people to meet along the way, and rules and regulations to follow during the opening process and while the business is up and running.

The steps to opening a franchise may seem daunting, but franchisees are provided with abundant support from head office during the process to ensure they succeed. Once a solid location is picked, staff are hired and trained, and marketing promotions get underway, franchisees are set up to find success with their new business endeavour!

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