finance
Franchising
Licensing your business model to independent operators who run their own locations under your brand.
Definition
Franchising is a growth model where you license your brand, systems, and processes to independent franchisees who open and operate locations under your brand. The franchisee pays upfront fees and ongoing royalties (typically 4-8% of revenue) in exchange for a proven model, brand, training, and ongoing support. Famous franchises: McDonald's, Subway, Anytime Fitness. Franchising lets you scale faster than corporate-owned locations (franchisees finance their own expansion) but requires very tight systems and brand discipline. Heavy upfront investment in legal, training, and operations infrastructure.
In your business
- →Don't franchise until you've run 3-5 corporate locations profitably - franchisees need a proven model, not an experiment
- →Franchise disclosure and legal requirements are heavy - invest in proper FDD (Franchise Disclosure Document) preparation
- →Franchisee support is the #1 driver of system success - underinvest here and the system fails