If you think the time has come to expand your business and you are looking to turn your company into a franchise, this article is for you! Below, we explain the signs to know if a brand is franchisable and the step-by-step to follow to achieve it in Spain.

What is a franchise?

In the business world, a franchise is a business model through which an individual or legal entity grants a third party the right to use its trademark and allows it to market its products or services within a previously defined geographical area, subject to certain conditions and receiving financial compensation for doing so.

To convert your company into a franchise, first, you must know that in this type of contract there are two parties involved: the franchisor and the franchisee.

• The franchisor represents the company that assigns the rights to market your product.

• The franchisee represents the investor who acquires the rights to commercialize

Step by step to turn your company into a franchise

Here are the 7 steps we have defined for you in case you are thinking of starting a franchisable business:

1. Business definition and feasibility analysis

In order to offer your business to a third party, it is important that you start by previously defining the products or services you will provide, as well as clarifying the objectives you intend to achieve as a franchisor.

In this way, it is important that you think of your business as a concept that can be easily reproduced and transmitted, making use of the appropriate indications and manuals so that the franchisee you select can put it into practice in an efficient manner.

However, to ensure that it is viable to turn your business into a franchise, you will have to define the functions you will perform as a franchise center and the results you expect when you grant the rights to your brand.

2. Enhance your company’s strengths

In this particular point, it is about creating a solid and committed brand image that manages to position itself in the market, generating a positive reputation in your environment and your public.

To do this, it is important that you not only register the trademark, but also add some values that help you connect with consumers and potential buyers interested in acquiring your franchise. The truth is that this is one of the fundamental aspects that can make that person interested in acquiring the rights of your company select you over another business.

3. Registration in the Register of Franchisors

Under Spanish law, the franchise system is regulated by Royal Decree 201/2010 of February 26, 2010.

Therefore, an essential step that you must comply with is to officially register in the Franchisors Registry, through the General Directorate of Domestic Trade. You can enter through the website of the Ministry of Economic Affairs and Digital Transformation.

In this sense, you are required to submit an informative dossier that presents the proposal of your business to transform it into a franchise and comply with the legal provisions. So you must comply with the following aspects:

• Having a registered trademark

• Create a business proposal and feasibility document

• Prepare a Contractual Information Document for franchisee use.

• Check your business plan and verify experience in the area.

• To have an operational and feasibility manual to develop each of your company’s processes efficiently.

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4. Specify which is your franchise headquarters

Defining the headquarters for your franchise will facilitate the business relationship, since its main function is to channel the information coming from the rest of the businesses and to be able to advise your franchisees correctly in their day to day.

For the process and quality of your products or services to be maintained at any of your franchise locations, you will have to dedicate a large part of your time to manage and lead your team, without distance becoming an obstacle.

5. Present a stable financial model

Although it seems to be something that all entrepreneurs have in mind, sometimes they overlook such an important aspect as defining their financial model; and if we talk about becoming a franchise it will be an indispensable fact to know for your future partners.

This is how you can rely on experts in the area to help you carry out an economic study and provide information concerning investments or estimated income during a set period of time for your company.

6. Franchisee selection and contract

To choose that partner who will have the right to commercialize with your company there will not be a unique and ideal profile, you will simply have to evaluate their qualities and take into account elements such as:

Once the franchisees are defined, you must draw up a contract in which they commit to join your company and specify and delimit the obligations of both parties. For example, you must clarify the term of the contract, fees to be paid, territorial exclusivity, existing penalties, renewal clauses, among others.

7. Follow-up and relationship with your franchisees

The last but not least step in turning your business into a franchise is to maintain an optimal relationship with your entire team and provide key information in order to expand your business to success.

In addition, it is important to highlight that you provide a support and technical assistance service that can solve possible doubts in a progressive way, as the locations of your franchise progress.

On the other hand, if it is within your economic possibilities, it is convenient to offer some kind of introductory training that will allow franchisees to adhere to your business plan and validate effective communication in the future.

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Advantages of creating a franchise

We know that the procedure to become a franchisable company may seem scary or quite long. However, once you manage to define the points previously explained, you will notice that there are multiple advantages of turning your company into a franchise. Here are the main aspects you should know:

• Gives you rapid growth

• Improve your brand’s reputation in the marketplace

• You provide defined processes that facilitate the economic growth of your business.

• It is associated with lower commercial and financial risk.

• Your new partners will benefit from the consolidated advertising of your brand

• You can make visits to your franchisees to ensure that the processes are followed as established at your head office

• Both parties ensure the correct operation of the business.

• Creation of a brand image with greater notoriety with consumers

• Lower personnel costs, as each franchisee will be responsible for its own management.

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In short, creating a franchise requires a previous study and the right advice to strategically plan your business objectives. Therefore, if you want to get an audit in your company, our experts at TAS Consulting are at your disposal and through our website you can contact them in less than 24 hours.