Franchising lets other people open and run businesses under your brand, using your systems. They invest their own money and pay you fees. You grow without funding every new site yourself, but you depend on franchisees to protect a brand that you own.
This guide is for businesses that want to become a franchisor. If you want to buy into someone else's franchise, see buy a franchise.
Check your business can be franchised
Not every successful business works as a franchise. Someone else has to be able to copy it, and still make enough money after paying your fees.
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Prove the model works
Show a track record of profit, ideally from more than one site, and that the results do not depend on you personally being there.
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Run a pilot
Run at least one outlet the way a franchisee would, with a manager following your systems, to test that the model can be copied and to produce figures you can stand behind.
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Check the numbers work for a franchisee
Work out whether a franchisee can pay the set-up costs, your fees and their own wages and still make a return that justifies their investment.
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Write down how the business runs
Your operations manual records your know-how, standards and procedures. It is what you are licensing and what you will train franchisees to follow.
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Plan your own support team
You will need people and money to recruit, train and support franchisees, and to check they keep to your standards.
Understand the legal position
There is no franchise law in the UK, but that does not mean there are no rules.
Protect your brand and know-how
A franchise is a licence of your intellectual property. Make sure you own it, and have registered what can be registered, before you license it to anyone.
Keep your operations manual confidential and share it only under the franchise agreement. If you want to license your intellectual property outside a franchise, for example to a manufacturer, see license your IP to others.
Write your franchise agreement
The agreement is the main source of your rights and your franchisees' rights. Have it drafted by a solicitor who specialises in franchising.
Recruit and support franchisees
Many franchise disputes turn on what the franchisee was told before signing. Being honest at recruitment protects you as well as them.
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Give accurate information before they sign
Share your real costs, fees and trading results, and be clear which figures are forecasts. Keep a record of what you provided.
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Tell them to take independent advice
Encourage prospective franchisees to have the agreement reviewed by their own solicitor and their figures checked by an accountant before they commit.
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Choose franchisees carefully
Check that each prospective franchisee has the money, skills and commitment to run the business to your standard.
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Consider British Franchise Association accreditation
Membership is voluntary, but it commits you to the BFA's Code of Ethics and is recognised by franchisees and banks that lend to them.
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Train, support and monitor
Deliver the training and support the agreement promises, and check regularly that franchisees follow your standards. Deal with problems early and in line with the agreement.
Legal basis
Primary legislation and key regulations