If you’re starting to think about franchise development, chances are you’ve built a business that works. You might be wondering: How can you turn your business into a repeatable, scalable business? This is exactly what franchise development is all about.
So, what does franchise development actually involve? Who’s responsible for doing it? And should you hire a development company or go the DIY route?
Key Takeaways
- Franchise development is about turning your business into a scalable model that others can own and operate.
- Franchise developers are professionals who help you with everything from gathering legal documents to training and brand development.
- The development process involves steps such as feasibility studies, business model design, creating the FDD, and registering the franchise.
- In order to choose the right franchise developer, you’ll need to ask the right questions and know how to spot overpromises.
What Is Franchise Development?
Franchise development is the process of transforming an existing business into a franchise by leveraging what works in your current operation and refining it into a model that others can follow and replicate. This includes your systems, products, brand, customer experience, and more.
Developing a franchise is much more involved than simply granting someone the right to use your trademarks in another location. Proper franchise development involves creating legal documentation, training programs, marketing plans, and an operations manual. How well you develop your franchise can make or break your business. A poorly developed franchise may have a much slower start or even fail.
While the process may seem complicated, and some aspects may feel like “nice-to-haves,” franchise development protects your brand and business and sets everyone involved up for success.
Who Is Responsible for Franchise Development?
It depends on your goals and how much control you want to keep. There are several ways to handle franchise development. So, here’s a breakdown of the main players who typically manage this process.
In-House Developers
You might choose to keep the franchise development process internal. That said, I don’t recommend handling it all yourself. Instead, you’ll likely need to hire a dedicated team or appoint someone you already have on staff.
The benefit of this route is that you stay closely involved and can shape every decision. On the downside, it’s time-consuming and there’s a very steep learning curve if you’re not experienced.
If you’ve got the budget and the dedication to hiring the right people, in-house development works best for founders who want full control.
Franchise Development Companies
Working with a franchise development company is a popular route because it allows you to move faster. They’re essentially third-party teams that specialize in helping brands become franchises. These companies generally have proven expertise in converting businesses into franchises. Development companies usually handle the entire process but work closely with you to keep things moving in the right direction.
However, not all development companies are created equal. Some focus mostly on the legal and documentation side of things, while others offer full-service support. Choosing the right partner can make or break your success, which I’ll get into more detail later.
Franchise Brokers
Franchise brokers don’t actually build your franchise system. They help sell it once everything’s up and running. Brokers are almost like matchmakers who connect qualified buyers with franchise brands and usually work for a commission. Some might also provide light consulting or marketing help, but their main value is access to a network of potential franchisees.
In a 2024 survey, 44% of brands said they used brokers as part of their recruitment strategy. I wouldn’t recommend going with a broker if you are looking for full-service support, but franchise brokers are a good option if you’ve already developed a detailed franchise model and just need help scaling.
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What Do Franchise Developers Do?
A good developer will aim to turn your current model into something others can run without diluting what made it successful in the first place. Here are a few key areas they typically support:
Develop Your Franchise Business Model
Your current business model might be completely solid, but you built it. Franchising is about making sure it can be just as successful in someone else’s hands at an entirely new location.
Developers assess your franchise model and identify any gaps to ensure it’s scalable and will be financially beneficial for both you and franchisees. This means tackling important questions around royalties, territory strategies, and clear lines between what you control and what franchisees control.
This is how you can truly grow your business without stretching yourself too thin.
Build Out an Operations Manual and SOPs
You might be surprised how much the success of your business relies on decisions and processes that, until now, you’ve kept entirely in your own head. A developer will draw out all the things that make your operations successful and transform them into an operations manual and Standard Operating Procedures (SOPs) that others can easily follow.
This involves creating clear, written manuals and checklists for everything from back-end workflows and opening and closing processes to quality control standards.
Create Franchise Training Programs
No matter how detailed your manuals are, franchisees and their teams will still need hands-on support, especially while they get up and running. Franchise developers play a significant role in creating the training programs that teach the teams the “how” and “why” of operational processes and brand guidelines.
Depending on the process and developer, this can include:
- In-person onboarding
- Virtual training
- Certifications
- Video tutorials
- Checklists
It really depends on what makes sense for your business and the resources your developer has for creating training.
Draft the Franchise Disclosure Document (FDD)
This is one of the most important documents you’ll create as part of your franchise development. The Franchise Disclosure Document (FDD) is a legal requirement that outlines the details of your business and what you are offering to prospective franchisees.
A franchise developer will work with you, and typically an attorney, to ensure your FDD is complete and compliant. For example, it’s a legal requirement to provide the FDD to franchisees at least 14 days before signing a final contract.
Within the FDD, you’ll document essential information about your business model, such as the franchise fees, royalty payments, and training obligations. It sets the tone for the entire relationship with your franchisees and protects you both from misunderstandings.
Set Up Internal Franchisee Support Systems
Successful franchisees mean a successful franchise for you. With that in mind, providing ongoing support is likely in your best interest. A developer may help you set up the infrastructure and systems to do this efficiently. For example, you consider setting up a franchisee portal with access to important documents and reporting systems.
When you provide easy access to scheduled check-ins or troubleshooting channels, you set franchisees up to work efficiently, which ultimately means higher royalty payments for you.
Guide Brand Consistency Across Locations
Each location in your franchise should have a consistent look and feel. You’ll need to create a brand voice, streamlined franchise marketing materials, staff uniforms, and pretty much anything that contributes to the customer experience.
Your developer can work with you to create brand guidelines and training that keep everyone on the same page.
Franchise Development Process: Step-by-Step
Now that I’ve covered what a developer usually provides, here’s a breakdown on how the franchise development process typically plays out:
1. Conduct a Franchise Feasibility Study
You might feel your business is ready for franchising, but the first step a developer takes is validating this idea. The goal is to identify any gaps and determine if your business is truly ready for franchising. Here are some things they may look at:
- Financial performance
- Brand strength
- Market demand
- Operational systems
- Existing ease of replication
This provides a concrete answer on whether franchising is a smart financial move and which areas you need to address before taking the leap.
2. Define Your Franchise Goals and Growth Strategy
Deciding to franchise is one thing, but you need to have clear goals mapped out. For example, do you want to expand regionally or nationally? Which locations are your first prime targets? Do you prefer slow and steady growth with tight control, or are you looking to scale quickly with multi-unit deals?
3. Structure the Franchise Business Model
These plans mean very little if they’re financially viable. Developers can work with you to ensure these models will be profitable for both you and the franchisees. You’ll need to create frameworks that outline franchise fees and royalty percentages, as well as contributions to marketing funds and equipment provisions.
4. Develop the Franchise Marketing Strategy
Another crucial step to franchising your business is to nail down marketing strategies for both the overall parent company and your franchisees. You aren’t simply marketing to customers anymore; you’ll also need to market the opportunity to potential franchisees. Your strategy needs to cover all these bases, and franchise developers have existing playbooks to help you lay the foundations correctly from the start.
5. Build a Lead Generation and Sales Plan
This step is particularly important if you’re seeking fast growth. Franchise developers can help you build a strong sales pipeline that attracts qualified prospective franchisees. You may want to incorporate elements like digital advertising into a comprehensive plan for attracting franchisees.
You’ll also need to develop processes for onboarding franchisees, like screening, setting up discovery meetings, and outlining the decision-making process to turn interest into deals.
6. Create Legal Documentation
I’ve already covered the creation of your FDD, but there are other legal documents you’ll need, like the legally binding franchise agreement.
You can work with an experienced franchise attorney here, but your developer likely has a retainer with one already or at least a network of trusted contacts.
7. Register the Franchise Where Required
There are 22 different states that require you to register or file your franchise before you can legally make an offer to sell. Typically, you’ll need to file your FDD with the appropriate agency in whichever states you intend to sell your franchise. There are usually applications to fill out and approvals you’ll need to receive before launching any marketing campaigns.
Again, a good developer will know the score and can manage these processes for you to stay compliant and avoid delays.
8. Prepare Operations and Training Materials
Now that you’ve got a structure in place and are ready to start selling, it’s time to make sure all your operational manuals and training materials are as tight as your legal documentation.
If you’ve secured a franchisee, you want to be in a position to let them hit the ground running with everything they need. During this step, franchise developers will finalize your training guides, onboarding resources, templates, and Standard Operating Procedures (SOPs).
9. Launch and Begin Franchise Sales
Now that everything is in place, you’re ready to launch. Your development work has set the stage, but this is where the work you’ve put into support systems and brand consistency will start to pay off.
Tips for Choosing the Right Franchise Developer
There are lots of franchise developers out there, and some are much better than others. Think about whether you need a full-service team, because some developers are glorified consultants who can overpromise and deliver not much more than a book of templates.
Here are some of my quick tips for picking the right developer:
Always Ask for References and Follow Up
Any decent developer will have testimonials and references. Follow up with those references and ask detailed questions to understand their experience and the results they saw. I also suggest going through social media profiles and online reviews.
Understand Exactly What You’re Paying For
Are you paying a flat fee or choosing from a menu of distinct services? Get a detailed breakdown of what’s included from your developer before you sign off on an agreement. For example, who covers legal fees or design work for marketing materials?
Be Wary of Overpromises
No developer with real experience and success is going to guarantee a certain amount of franchise sales in a given timeframe, for example. Look out for these types of claims and seek out honesty on timelines and risks.
Look for Industry Experience.
Developing a fast food franchise can look very different from developing a fitness center model. Most good franchise developers are experienced in a particular niche, so be sure to ask which brands they’ve worked with previously.
Take the Next Step Toward Franchising with Confidence
Franchise development is one of the most important investments you’ll make in your business’s future.
Looking for more advice on turning your business into a franchise? Schedule a free call with us at Franzy, and one of our franchising experts will guide you every step of the way.
