For those who decide to build their business through franchising, one of the biggest obstacles is the added cost and the level of funding therefore required at the initial stage. Anyone who is considering growing their business through franchising should give full consideration to the following cost items:
The pilot operation
The franchisor must have operated a successful test operation before franchising the business. Funds will be required to do this.
The operating manual
A thoroughly prepared operating manual must be written before franchising commences. This will certainly involve a considerable period of time and may also require an input from a consultant and/or other/s with appropriate expertise.
The franchise agreement
Whilst the franchisor will set out the terms of the franchise agreement, a lawyer must be retained to fine tune it and constitute it as a proper legal contract.
Promotional material
The writing, design and printing of a range of good quality promotional material for the franchise pack for prospective franchisees must be funded.
More than all the above, perhaps, is the quantity of management time that must be dedicated to the development of the franchise concept. Apart from the franchisor's own time, additional management resources and a strong team will be required to provide back-up and support for the franchisee network.