Franchise Consultants | Middle East

Franchise Consulting

There are many ways in which two businesses join hands and reap mutual benefits. Franchising is one such form of association. Other forms are mergers and acquisitions, amalgamations, strategic alliances, partnerships, etc. In a franchising model, a franchisor grants licence or rights to a franchisee to do business on the franchisor’s behalf based on an agreed set of terms and conditions. For SMEs & Large enterprises this model helps them to reach out to new and larger markets. Franchising helps to reduce operational costs, focus on core competencies, and penetrate fast into existing and new markets.

Franchising has proven to be a very effective business arrangement when it comes to exploring new markets, especially, for global expansion. The benefits are localization, risk optimization, technology-sharing, reduced capital burden, a synergy of mutual experience and expertise, larger market share, better market penetration, vertical and horizontal integration, etc. You know the benefits but you are also aware that there are difficulties when to set out to franchise your business.

Challenges faced when you give Franchise

Especially because of the risk benefits, franchising sounds like the ultimate solution of business expansion to reach any market in the world. The veterans of the business world and experienced franchise business consultants will advocate some caution and preparedness here. Derived from our experience with the Middle East region of delivering franchise consulting services, before we explore “how to give franchise of your business?”It is important to have an understanding of the challenges you might encounter in franchising your brand across the MENA region, highlighted below.

Choosing the right Franchise Strategy

The decision to adopt the franchise route is driven by strategic business reasons. For some, it could be to expand business in the existing market while for some others it could be to better address customer experience by working closely in the supply chain. Not crafting the right strategy is the number one reason why many businesses fail in the franchise mode even if they are successful with their home-run business model. An experienced franchise development consultant would first ask – why franchise? You need to have strong reasons in answering – why should I franchise my business?

Indistinct Franchise Business Plan

A franchise arrangement works as long as both the parties profit as intended. Any financial miscalculation and the franchise arrangement begins to become a burden for both. Preparing a detailed franchise business plan is important to assess the feasibility while starting a franchise business. If the numbers are not happy in the business plan for franchise stores, the franchise arrangement between franchisor and franchisee also cannot be happy in the long-run.

Absence of Franchise Operations Manual

A common reason for the fallout of franchisor-franchisee relationships is the lack of operational transparency. This happens when operational standards and expectations are not clearly established and communicated. Two people can agree to grow a tree that will bear fruits later but if the responsibilities and accountabilities are not clearly set and agreed upon the tree will never grow to give the desired fruits.

Franchise Report for Monitoring and Compliance

Are the franchise business operations being run as intended? This is a major headache in any franchise model especially in the backdrop of a technological platform that fails to meet the required standards of monitoring and reporting. To keep a tab on business operations and fulfilment of the terms of performance as per the agreed routes and standards, technology-aided reporting and monitoring is a vital requirement which needs to be supported with franchise management software. Also, it reduces the chances of miscommunication and misunderstandings by limiting the scope of human activities in the process.

Attracting and Selecting the right Franchisee Partner(s)

In franchising your brand, an important task for you will be finding a qualified and responsible franchisee. If a brand is well-known in a market, it may not be difficult for franchise lead generation. But the challenge would be determining who best fits into the role as a franchisee partner. Considering a brand is new or does not carry any significant popularity then, a bit more of challenges are involved in this process when they give franchise which YRC franchise experts can help overcome with a well-defined strategy and franchise business model canvas.

Eliminating Franchise Legal Issues

Franchise businesses are usually governed by franchise disclosure documents or various types of franchise agreements depending upon the franchise model business plan. For entrepreneurs and businessmen who are new to the franchise model, it can be difficult for them to ascertain where to begin to develop the franchise agreement format. These franchise contracts involve legal technicalities and require an experienced business legal professional. If done casually, there can be loopholes which in the future can become a source of contentions.

How can YRC help to turn your Business into a Franchise?

From strategy formulation to crafting the operational roadmap, YRC stays by your side as a seasoned business franchise consultant. As the “best franchise consulting company”, awarded in the Middle East Region, we held ourselves responsible to prepare our clients to succeed with franchising. In franchise consulting services, we help you define the key strategies, prepare the financial forecasts, assist in franchise partner evaluation parameters, draft the franchise legal agreements, design and develop Franchise SOPs, and define the audit processes. In a nutshell, YRC can help you franchise your business in a planned and professional manner.

Expansion Strategy

Our team of franchise experts will work closely with your team to better understand your business requirements and the decision to go the franchise route for growth and expansion. We will help you formulate an effective franchise expansion strategy. This is also where you get a plausible business case to a fundamental question – how to set up a franchise business?

Franchise business plan

We realise the importance of a sound business plan for any business project – whether it is a startup or a franchise arrangement. Without commercial interests being carefully assessed, a franchise deal will soon turn into a loss-making project. In preparing a business plan, our franchise development consultants cover the assessment of capital and working expenditure requirements, pricing and costing, turnover and revenue projections and statements, ROI and break-even analysis, etc. Incorporating a franchise revenue recognition model has become critical to ensure franchisee success and safeguard brand reputation.

Standard Operating Procedures (SOPs)

As a retail consulting company, Franchise manuals development is one of our core competencies. We offer SOP consulting and development services for franchise businesses. Here, our focus is on establishing franchise process flowcharts, routines, consistency of standards, franchise setup checklists, better growth systems, and eliminating loss of productivity. We expect to deliver the many virtues of SOP.

Franchise Audits

We understand the pain points of running a franchise model. Whether you are an international pizza chain brand or a sports accessories company, if you are not keeping a tab on the ground realities of your franchise business operations, you could very well be putting your brand at a stake. Our robust audit processes are aimed at ensuring that the established operational standards are followed without a miss and how these could be further improved.

Franchisee Lead Generation Strategy

Our approach initiates with defining the roadmap first. This will include marketing strategy for franchise business for generating leads via internal and external channels, scanning potential partners and crafting stringent guidelines for background check. As franchise development consultants we have observed this question of “how to promote franchise business” has been the most ignored parameter while developing the franchise model, which we strongly execute for our clients.

Drafting Exclusive Franchise Agreement

A franchise agreement along with a franchise disclosure document is a legal framework that defines the scope of duties and responsibilities between a franchisor and franchisee in carrying out a franchise business. At YRC, these agreements are drafted and vetted by legal experts and aimed at safeguarding the legal grounds of their clients.

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We are a boutique franchise consulting firm. To know more about our franchise consulting services or if you have any query about “how to franchise my business?” get in touch with our team of franchise consultants, and our franchise experts we will get back to you.

FAQs

What do you need to franchise a business?

Before franchising your business, it’s essential to assess your eligibility to franchise. Key prerequisites to franchise your business are, as follows:

  1. Your business must be profitable: You must have a proof-of-concept of a profitable store/ outlet, otherwise the franchisee shall also incur losses and shut down within few months of operations
  2. Strong systems and SOPs: Ensure you have well-defined business blueprint for your franchise to maintain service standards
  3. Franchise Management Software: Ensure your software support franchise business operations and reporting
  4. Robust Franchise Business Plan: Ensure you build your best-fit franchise model and not cut, copy, paste your competitors franchise model
  5. Registered Trademark: Ensure to safeguard your brand name before you start franchising
  6. Franchise Agreement Exit Clause: Ensure you define the exit clause in detail, other franchising can turn into a disadvantage for your business

How to franchise your business?

Steps to franchise your business:

  1. Assess your eligibility to franchise
  2. Define your franchise business model
  3. Draft your franchise agreement, as per the model finalised
  4. Decide your franchise lead generation strategy
  5. Ensure you have robust SOPs, systems & team to support franchise expansion

To know more about franchising, refer to the video curated by top franchise consultant of middle east. Click here.

How much does it cost to set up a franchise

Listing down the areas to assess the cost before franchising:

  1. Franchise Management Software & SOPs: Ensure you have systems to support franchise operations and reporting
  2. Franchise Management Team: Hire team to train, audit, support and manage the franchise business operations
  3. Marketing: Ensure you have an allocated budget to support your franchise in marketing
  4. Infra: Ensure you invest in infrastructure required for franchise expansion i.e. warehousing facility, supply-chain, etc

There might be other costs too depending on the franchise model finalised, but the above points are must-have prerequisites where a franchisor needs to invest to ensure success in franchising

Benefits of franchising your business

Advantages of setting up a franchise, are as follows:

  1. Scalability: Expansion becomes fast and easy, provided done in the right way.
  2. Economies of scale: Shall increase the power of negotiation during procurement of products and services
  3. Brand Visibility & Credibility: Higher the visibility higher the brand valuation. Shall help for valuation to raise funds from investors or while public listing.
  4. Cross-border Expansion: Expanding to different countries becomes easy with franchising or master franchising model

but, it’s important to define a robust franchise model and ensure your have the SOPs and systems to support your expansion to avail the above listed benefits from your franchise model

Franchise models types

Few common Franchise Model types, are as follows:

  1. FOCO: Franchisee Owned Company Operated
  2. FOFO: Franchise Owned Franchise Operated
  3. COFO: Company Owned Franchise Operated

As franchise advisors, we strongly recommend devising a Hybrid franchise model custom-made as per the business requirements.

Buying a franchise vs starting a business. What is beneficial?

It is always beneficial to start your business and franchise your own business.

Taking a franchise has limitations of scalability and limited profitability. If you have the time, money and required resources to build your own business, then starting your business has a higher probability of success.

Disadvantages of franchising your business

Following are the key disadvantages of franchising your business:

  1. Legal issues with the franchisee
  2. Risk of loss of brand reputation, due to false claim on IP by the franchisee
  3. Franchisee support can be taxing due to demanding franchise owners
  4. Poor Service by given Franchisee can hamper brand reputation
  5. Closure of franchise outlets due to poor management by franchisee

Having said the above points, 90% disadvantages are within control and risk can be reduced as follows:

  1. Having robust SOPs and audit systems to ensure franchisee is maintaining service standards
  2. Well-define franchise agreement to safeguard brand IP and reputation
  3. Clear define scope of franchisor and franchisee in the franchise model

Get in touch with YRC franchise expert to make sure you understand the “don’ts” of franchising

How to create a franchise business model

First lets understand the Franchise model meaning: Franchising involves a “franchisor” and a “franchisee” wherein their scope of work are clearly defined within the franchise model.

Now. Let’s explore how to create a franchise business plan?

Key steps to create a franchise business model, are as follows:

  1. Evaluate the “Strengths” & “Weakness” of your business
  2. Decide the best suitable business model i.e. FOFO, FOCO, COCO, COFO, Hybrid, etc
  3. Assess the financial feasibility of the business model. Sometime few models may not be profitable for the franchisee, thus assess multiple models at this stage
  4. Define Franchise Agreement and legal documents, after finalising franchise model, because the terms of agreement shall depend on the franchise model finalised
  5. Define strategy for franchise lead generation: Define the process and channels for franchise lead generation and conversion
  6. SOPs: Ensure you define Standard Operating Procedures before giving franchises to ensure the service standards are maintained. 55% of franchises fail due to poor operations.

To know more about these steps, get in touch with YRC Franchise Expert and explore your success in franchising journey.

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