Strategic Franchise Planning begins with a document called the Business Plan or Growth Project for the firm. Every business, no matter how small, must consider planning in order to face the contingencies of the environment and survive in them. This activity marks the structured start towards the franchise system, which during its exercise will correct deficiencies in the operation as well as the detection of opportunities.
The aspects that the Strategic Planning in the Development of Franchises must cover imply certain important points as well as costs in time and money, among the most important are: having a well-defined mission, vision and values considering clients, suppliers, partners, employees and the society it serves. The business history should be widely written from the foundation to the present day; You also have to define the main objective of turning the business into a franchise; Subsequently, the analysis of the business concept is made, which represents its distinctive seal with respect to others of the same line of business, followed by this, the types of franchises to offer must be determined.
It will also be necessary to make a study of your competition with businesses of the same line of business, this will serve to obtain a clearer notion about the investment of your business compared to those of the same line of business and so that when offering your franchises they represent a better offer to the investor. As a next step you must establish your planning, the market and the location in which you want to operate, it is important to also determine the territory or territories to cover.
Take care of the aspect in your pricing policy so that they are competitive, as well as the supplier, it is recommended to develop a portfolio of the best suppliers for your franchisee network. You should always take into account technical assistance since it is a core part of any franchise and must be offered before operating the business, at the opening and during the years that the relationship between franchisor and franchisee lasts.
In order to analyze the legal aspect, it is necessary to consider the Franchise Offering Circular, a document that is delivered before the signing of the contract and which shows the way in which the business has performed over time, also understanding its situation. financial so that the aspiring franchisee can evaluate it before signing the franchise agreement, this document contains a series of clauses that support the rights and obligations of franchisor and franchisee. It will always be essential not to forget the existence of other contracts such as confidentiality and the use of software with special programs for the operation of the business.
Once the above has been developed and well documented, we enter certain costs, such as: the cost of preparing the system and the cost of starting a unit. Adding these two concepts determines the total cost to offer a franchise. The initial fee is the one derived from the development of the system, which is made up of the cost of the entire franchise infrastructure, taking into account the human element and inventories necessary to start operations. This expense is what an applicant to own the business at stake will have to cover in order to obtain the right to operate it under the franchise scheme, in addition to paying other royalties such as royalties for the amount of sales and a certain extra percentage of the quota that will go to advertising, additional services such as: sale of finished product,supplies and raw materials, additional assistance and support, transfer right, contract renewal, which represent additional income for the franchisor.
The expansion plan of a firm considers the number of units that are to be offered and the capacity to respond to everything that has been committed in the contract, as well as to demonstrate that it is profitable for the investor and that it is competitive with the rest of the business. It is in this way that it can be marketed with the probable prospects according to the profile previously determined in the development of the franchise and offer the possibility of adapting in the different markets by developing new products according to the fashion or evolution of consumer demands.
Summarizing the strategic development plan of a franchise system we have the following elements to consider in a franchise system:
Planning begins with the development of the following points
- Diagnosis of the company: where we are and where you want to goDefinition of the franchise scheme by territory, market, socioeconomic level Market evolution: competition by business and investment level Growth plan by stages Financial evaluation of franchiseability
Legal Aspects to consider in this business scheme
- Trademark registration Franchise Offering Circular Letter of intention to purchase a franchise in progress Franchise agreement Confidentiality strategies Other contracts such as distribution, supply.
Manuals necessary for the operation of the franchise
- Operations Administrative procedures Opening Corporate image Equipment and facilities Marketing and advertising
Assistance Programs
- Pre-opening and opening initial training where it will take place, School center, in-store, startup tests Initial and post-opening training and training. Continuous supervision and assistance: who pays the costs. "Turnkey" programs
Commercialization
- Presentation of the franchise brochures that support the image Franchise Offer Circular Media plan: in specialized magazines, radio, cinema, videos, television and electronic page.
The future franchisor must consider that the following expenses must be incurred and that is, without considering that the fees of a specialized consultant are not mentioned to guarantee the proper development of a franchise system.
Structuring cost depends on the objectives, strategies, infrastructure and size according to the nature and size in the development of a franchise system.
Franchise launch cost: consider all media expenses, the payment for the space occupied in specialized exhibitions for this type of business and all the promotional material to be known.
Initial Global
Cost Structuring Cost + launch cost = Global Cost
Franchises to be developed: these are the units to be franchised according to the growth stages specified in the medium-term strategic plan in very reasonable terms and as a result of a market study.
Global Cost per Franchise
Initial Global Cost / franchises to be Developed = Global Cost per Franchise
Placement Cost: consider that the expenses vary depending on the level of support and support:
- Advice and evaluation of premises or outsiders. Design of the premises from project to conceptual plans. Supervision of the work. Training: cost of training franchisee personnel, must include payments to the instructor, per diem, didactic materials, etc. Manuals and initial support: cost of operating and consulting manuals, manuals, video, model.
If you are willing to operate your business in this format, here are the main elements to analyze, perhaps now you are confused by all the activities that must be carried out, but don't worry, some of these points you already have prepared. The staff that you currently have can help in this process and in turn obtain the necessary preparation to face this change and even they themselves can help in the development of the standardization of products or services.
Remember that starting a business under this scheme is to plan and grow in a structured safe way, with a proven business model.
The franchisee expects to be offered a registered trademark and all the technical knowledge required to operate the business as well as the time in which the investment is recovered. These aspects will be monitored by the owner of the brand, however it will be necessary to take into account that when acquiring a franchise you must consider that you like the business line and above all that you have to work hard.
