How to create a profitable franchise in 6 steps?

Why set up a franchise? According to 2019 figures, franchise sales are worth €67.8 billion on the French market. This success can be explained by the franchise model, which offers a win-win situation for both franchisee and franchisor.

Franchising is a model that is easy to replicate, and is winning over more and more entrepreneurs. Together, we're going to look at the advantages and the key stages involved in setting up a franchise to help you develop your business.

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Why set up a franchise?

If you are an entrepreneur with a business based on a specific concept, franchising can offer you a number of advantages:

• Duplication of your points of sale: your franchisees will set up numerous points of sale on your behalf, so you don't have to invest in your own name,
• Increased turnover: the more successful your franchisees are, the higher the royalties they pay you,
• Increased brand awareness: If your concept appeals to investors, you'll be able to recruit franchisees more quickly and improve your visibility with customers.

The 6 key steps to creating a profitable franchise

At this point, you know if creating a franchise is for you. However, there are a number of steps to follow to ensure that the creation of your franchise network goes off without a hitch.

1 - Be sure of your concept

To develop your franchise, you need to be confident in your concept. In other words, your business must have already proved itself by attracting a significant number of customers. If your business is expanding rapidly, then it's a good idea to raise its profile and establish a foothold by creating a franchise.

Example: As soon as a concept works, proves itself to consumers and becomes profitable, it's time to think about creating a franchise. One of the best-known examples is McDonald's, which went through several stages before becoming one of the best-known franchises in the world:

1. When it was founded in the 1950s, no one was thinking of turning it into a franchise. Once their concept was established, they analysed the performance of the first restaurant.
2. The innovative concept of being able to serve a customer very quickly by producing the burgers in advance before they were even sold was extremely appealing to their customers. Their added value was the reduction in waiting time once the order had been placed.
3. From then on, this model was exported across the United States via franchises, and then around the world, making it the success it is today.

2 - Carry out in-depth market research

If your concept is sufficiently solid and successful with a large number of customers, it is still necessary to carry out market research to ensure that developing a franchise around your concept is viable:

1. Analyse the competition: the products they sell, whether they are similar to yours, and what your positioning and differentiation will be to attract your new customers.
2. Analyse your customer base: who are your products aimed at? Who are your personas?

To help you with this, don't hesitate to contact firms specialising in marketing. This will help you determine the type of location you should set up in and better define the profile of your ideal customer.

3 - Draw up a business plan

When starting up a franchise, your business plan is essential if you want to know whether you will be profitable.

This is the essential document if you need financing to develop your franchise. It is what will enable your future partners and franchisees to judge whether the franchise project is viable. It will also help convince the bank to grant you a loan.

What your business plan should contain :

• A presentation of your company and your franchise project,
• Analysis and study of the market in which your franchise will develop,
• The strategy employed for your franchise project,
• A presentation of the person(s) behind the franchise project,
• The raison d'être of the franchise,
• The choice of legal form for the company,
• The financial forecast.

4 - Protecting your brand

Under franchise agreements, your franchisees will have the right to use your intangible rights and processes. However, for the franchise agreement to be valid, your business must be legally protected. You must be able to prove to your future franchisees that you have registered a trade mark for your business with the Institut National de la Propriété Industrielle(INPI).

5 - Draw up your franchise contract

The franchise contract will seal the agreement between you and your franchisee. It will set out the financial obligations of both parties and the procedures to be followed by the franchisee, from the presentation of the premises to communication.

6 - Launch your franchise and train your franchisees

Once all these elements are in place, you can start creating your franchise network. However, there are still a few points that are essential to the smooth running of your franchise.

Recruiting franchisees:

The choice of franchisee will play a vital role in ensuring that your business runs smoothly, as they will be responsible for complying with and enforcing procedures. It depends on the image of your franchise network.

Training and support for franchisees

As a franchisor, you have a duty to train and support your franchisees. You must prepare the training that all franchisees joining your network will need, so that they know your concept, your products and your communications and marketing approach inside out.

Assistance and support for your franchisees

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This justifies the royalties you receive from them, and can take several forms:

• Up-to-date training,
• Support with recruitment,
• Communications and marketing support,
• legal support, etc.

Franchising is a real opportunity for any business that wants to grow. Now that you've familiarised yourself with the 6 steps to creating a successful franchise network, you're ready to increase your sales tenfold.