

Is your small business thriving? Do customers from out of town ask if you’re going to open another location in their neck of the woods? Are you secretly yearning for a new challenge now that your business is running so smoothly? If you can answer “yes” to all these questions, it might be time to consider franchising your business.
Ask yourself:
A good franchise has operational systems and processes that can be standardized and taught to other people to provide a consistent product or service across all locations. For example, if you own a sandwich shop, do you have a written system for all the steps of making a sandwich, such as:
It may sound picky, but these are the kinds of things that can make or break a franchise. If different franchisees make sandwiches differently, here’s what can happen:
An employee handbook and an operations manual are essentials before you even think about franchising.
This is a common issue with service businesses, especially if you started out as a one-person business. If you are a consultant, graphic designer, or masseuse whose clients only want to work with you, it doesn’t matter how many people outside your location ask for your services—there’s only one of you, and you can only spread yourself so thin.
To prep for franchising, start training employees to provide the same services you do. Then start easing your customers into working with your team instead of directly with you. You can do this by charging more for your personal services (as many hair salon owners do) or assigning new customers to employees while continuing to service the long-time customers.
There’s a lot of red tape involved in franchising. You’ll be required to follow both state and federal laws regarding franchises. For example, the FTC’s Franchise Rule requires franchisors to give prospective franchisees a Franchise Disclosure Document (FDD). This lengthy legal document provides information about 23 specific areas of the franchise, including:
Get the full list of items required in the FDD.
Creating and preparing these documents requires legal assistance that can be time-consuming and costly. If you don’t have the patience or budget to handle this part of the process, you may not be ready for franchising.
A business idea that is successful in one city or state (such as Hawaiian shaved ice) may not translate to other parts of the U.S. where consumers aren’t familiar with it. Before you start franchising, do your homework and ask:
It’s recommended to have at least three successful locations up and running smoothly and profitably before you contemplate franchising. Opening multiple locations will help you understand what’s involved in getting new locations up to speed.
You’ll also need sufficient working capital to:
All of this can easily add up to hundreds of thousands of dollars or more. If you can’t finance this internally, seek outside sources of financing.
If you love the hands-on aspects of your business, be prepared to wave goodbye to it as a franchisor. Instead of dealing with the day-to-day operations of one location, you’ll take on the role of a corporate manager. You’ll be responsible for things like:
If you don’t want to switch into this management-oriented role, you’ll need to promote or hire a trusted manager who can lead your franchising efforts.
Does franchising sound like the best path for you? If so, your SCORE mentor can help you decide if it’s realistic and get you on the journey to success.
Copyright © 2023 SCORE Association, SCORE.org
Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.