Creating A Franchise Prototype

Franchise Prototyping is Different from Franchising

Just imagine what might happen if a manufacturer attempted to mass-produce commercial airplanes before a prototype had been designed, built, tested, and revised. Not a pretty picture. To say nothing of the countless inevitable accidents, there would also be disagreements among employees about how to proceed, materials would be wasted, and time and money would be lost. Similarly, a small business must first have a model that works or must face similar negative consequences.

Franchising may or may not be a part of your vision. Yet, even if you are not planning on creating a franchise operation, you must behave and create your business as if you were going to.

You may have already guessed that franchising is very different from creating a franchise prototype. Franchising is another line of business entirely that involves just as many challenging issues and opportunities for business development as creating the initial prototype. Franchising is the next step after franchise prototyping.

When to Franchise

Before considering marketing a business as a franchise system it is critical to have established a single operation that works. Systems for leadership, marketing, finance, management, lead generation, lead conversion, and client fulfillment should be developed until they produce predictable, consistent, and profitable results. A profitable, turn-key system will attract investors.

Why Some Franchises Don't Work

What is often sold as a franchise is not a franchise system, which is why so many franchises don't work. Had the prototype been complete from the start, franchisees would not have many of the problems they experience. The lack of systems and the frustrations that result only get duplicated within each franchise. The absence of systems for marketing, finance, management, and operations wind up costing money that the franchisee often absorbs.

A New and Completely Different Customer

The target market for a franchise is different from those of the franchise prototype. The demographics and psychographics of those interested in buying your franchise offering will require a different marketing strategy.

Franchising is a Complex Legal Process

Franchising involves the field of franchise law and is particular to the state or country in which the franchise corporation is operating as well as the location of the franchise itself. It is complicated laws like these that require attorneys who specialize in such laws to assist in the drafting and execution of the required legal documentation.

What Does the Franchisee Purchase?

Ideally, a franchise owner would receive in exchange for their investment items like the following which are essentially the turnkey "system of systems" in writing: The operations manuals including all procedures and standards, a training system, 800-number support, channels of distribution for products and services, marketing materials, lines of communication, quality assurance, business plans showing financial performance, and more. The prototype documentation would all need to represent systems that were developed, tested, revised, proven; then it would be copied, packaged with the appropriate marketing messages and issued to the new owner.

The Relationship Between Franchisee and Franchiser

Often times franchise owners will mismanage their franchise and blame it on the franchiser. All these somewhat complex franchise relations issues need to be anticipated or the organization will suffer a myriad of frustrations - not to mention poor return on their investment. The Quality Assurance function can work with franchisees to ensure systems are followed as they were intended, so that the franchisee gets the results they expect. Quality Assurance also makes recommendations for revisions to the franchise prototype based on their findings "out in the field."

A Franchising System is Another Company That Requires Your Investment

As they say, it takes money to make money. To create the franchising system takes time and money to develop and even more to implement. It is literally investing in and running two separate businesses. So you have to ask yourself: is your prototype a moneymaking machine, and attractive to even yourself as "an investor?" Because, if not, you will have trouble acquiring the capital to build your franchising operation.

The Importance of a Business Plan

A business plan is critical and should be developed for both the franchise prototype and the franchise system. Two plans are needed. The first plan shows some degree of proof that your prototype works and would include the usual projections of cash inflows, outflows and profits. After all, if the prototype doesn't work, their franchise surely won't. The second business plan would include what the franchisee would get for their investment - a projection of how the system would work and what support you will offer them. The better the certainty of those profits, the lesser the risk involved, and the higher price a franchise can get for its rights.

The Importance of Creating the Organizational Structure for the Franchise Corporation

Early in the process of creating the franchise prototype, an organizational chart should be created. This is the basis from which you can consider the decisions you make now so they are in alignment with the complete picture of your vision. Personnel roles and accountabilities, and the centralization/decentralization of business activities are some of the questions that will come up in the normal course of business growth.

How Long Does Prototyping Take Before I Can Sell A Franchise?

It all depends on the circumstances and the level of commitment of the owner to the process of franchise prototyping as well as the complexity of the business, size of the vision, the particular industry, current financial and time resources, and more. With many exceptions, generally the development of the franchise corporation could begin as soon as three to five years into the E-Myth Mastery Program. And, in the grand scheme of your entire life, what's three to five years?

Press Contact

Justin Dye
E-Myth Worldwide
541.552.4636

jdye@e-myth.com


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