Bill Redfern: Starting a Franchise Business
Franchising is a unique business model that allows business owners to reach far more customers and generate substantially more revenue than they would by following traditional models. The concept has been around for nearly 50 years, and has proven time and time again to work.
But becoming a successful franchisor is not easy. Transforming a business idea into a recognizable brand name can be a long and complicated process, and typically involves sizable upfront costs. However, if a business is franchised correctly, it can expand at an enormous rate and that expansion will cost significantly less than if the company itself purchased and operated new units.
The first step in becoming a franchisor is to assess your interests and areas of expertise. As the old saying goes, "Know thyself." Only then can you accurately determine what area of business is right for you. For example, consider Bill Redfern, the CEO and founder of A Buyer's Choice Home Inspections. After working as a real estate broker for many years, Redfern couldn't help but notice severe issues with the home inspection industry. Combining his knowledge of the business with his passion to standardize the industry, Redfern launched a new franchise in 2007. Today, A Buyer's Choice is one of the fastest growing international franchises in the entire world.
Before embarking on any business endeavor, it is imperative to determine how much you're willing to risk. For instance, if you're interested in launching a new franchise business, you'll need to first figure out how much of your own money you can reasonably afford to use as liquid capital, and how much you feel comfortable borrowing.
Then it's time to determine if your ideas for a franchise are viable. The best way to do this is to conduct an extensive study of the market. Try to assess consumer demand in your home town and speak with other franchise owners in the area.
Once you've determined that the need is there, it's nearly time to bring your idea into fruition. But first, before you can sell franchises in the United States, you must first complete and register a Franchise Disclosure Document (FDD). In order to be approved, you must provide an operating manual, description of your business and your personal experience as a business owner. Depending on the state in which you apply, the approval process can take as long as a year and cost more than $100,000. To expedite the process, do yourself a favor and hire a franchise lawyer. The last thing you need is to inadvertently skip steps in the process.
After the legal paperwork is out of the way, you should start thinking about your business model. For instance, Bill Redfern decided upon a one-time franchise fee of $29,900, which includes marketing materials and training, in addition to ongoing royalties on revenue starting at $15 per inspection. This model was both favorable to the franchisor and the franchisee, and played a substantial role in ABC's rapid growth.
Now that you have a business plan and have made all of the important decisions regarding how your franchise will operate, it's time to start selling franchises. Who knows, maybe one day you can be the next Bill Redfern.