The first stage is a confidential consultation where we gather information and determine whether the hypergrowth process is an appropriate strategy for growing your business. How long has your business been operating? Is your business profitable? Can your model be duplicated? What differentiates you from your competitors? The answers to these questions can help us determine whether your business can be franchised.
This is a legal document necessary for compliance with franchise laws, franchising your business, and selling your franchising rights. The Federal Trade Commission requires that every FDD include 23 disclosure items. Together these will inform potential franchisees about you, your franchise, the legal obligations of both parties to the agreement, franchise fees, royalties, start-up costs, territories, trademarks, representations of financial performance, and more. Your FDD must be updated annually. In registration states, it must be registered with and approved by state regulators before you can begin selling your franchise. Your FDD must be disclosed to potential franchisees 14 days prior to them signing any agreement or paying any fees.
The Operations Manual is a confidential “how-to” guide that lays out your brand’s goals and vision, product and service requirements, designated suppliers and inventory requirements, operations standards, marketing and administration requirements, franchise location opening process, and more. This document will only be provided to franchisees once they have signed the franchise agreement. Only the table of contents and number of pages will be disclosed in the FDD.
The legal right to use your trademarks, business name, and logo is one of the most important rights you are selling. In order to protect these rights, you must register them with the United States Patent and Trademark Office (USPTO).
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You will need to create a separate corporate entity, likely an LLC, from your current business that will deal exclusively with selling franchises, assisting your franchisees, and collecting revenue from royalties and initial franchise licensing fees. This will partition the FDD financial statements and reporting requirements from those concerning the operation of your business. This also places the franchisors contractual obligations on the correct corporate entity. FDD Item 21 requires franchisors to disclose an audited financial statement of the franchise company. Creating a separate corporate entity will significantly simplify and cut the costs of reporting.
Franchising laws differ from state to state. Some require you undergo a registration process where you must provide documentation, financial disclosures, and pay a fee before a state regulator grants approval. This process can take several months. Franchising filing states require you file with them and pay a fee but beyond that do not have an approval process. Non-registration states require only a Franchise Disclosure Document (FDD). The map below will help you determine which states are registration, filing, or non-registration states. It is of critical importance to ensure that your FDD is multi-state compliant to avoid any delays when expanding into new territories.
When developing your budget, you should consider the two distinct phases of franchising: the franchise development stage, and the franchise sales stage. The franchise development stage includes everything involved in getting your business franchised. This process usually takes three to four months. The franchise sales stage begins once the franchise is established and is a continuous process of onboarding new franchisees, training them, assisting them in opening new locations, and overall growing your franchise.
Strategic Marketing & Sales Development: The process of developing a marketing and sales strategy requires asking yourself some important questions which will yield answers that you will continuously refine and crystallize over time. What is the value proposition of my franchise? What are my franchise sales goals over the next six to twelve months? How much am I going to invest in franchise sales over the next six to twelve months?
The two main concerns of a franchisor are growing their franchise by bringing on new franchisees and providing the necessary support for existing franchisees to successfully open and manage their locations and grow their sales. The more successful your franchisees, the more enticing your franchise sales proposition becomes. However, this is a serious commitment of time and resources. You will need to develop an effective strategy that balances your time between assisting existing franchisees and bringing on new ones. Periodic franchisee meetings, both in-group and one-on-one will be necessary. Onboarding new franchisees will require that you hone a discovery and conversion process that educates and entices potential franchisees. Our expert team will be by your side to guide you every step of the way in putting these frameworks in place. We go above and beyond any other broker because we possess the in-house expertise to provide fractional executive support to the roles of Chief Growth Officer, Chief Financial Officer, Franchise Manager, and more. We can put your franchise on the pathway to hypergrowth.
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