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How to set up a franchise operation

We recently received a request from one of our readers to write about how to take the first steps toward becoming a franchise. I immediately thought of my friend Dino Dakuras, a restaurateur who has taken the EMyth principle of the Franchise Prototype to heart in the process of franchising his own business. Since he's so passionate and articulate about his business, I asked Dino to address our readers' question; here's what he had to say.

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How I started my franchise business

It all began in November of 2000 when I opened Dino's Chicago Express in Augusta, Ga. I was young, I had big dreams and big hopes, and I understood that anything worth getting required consistency and hard work. After my first year in business I realized that to grow my business I needed to find ways to simplify it -- and that's where EMyth came in.

I read The E-Myth Revisited and instantly understood the importance of working on your business and not in your business. Shortly after reading the book, I realized that in order to succeed I needed to build a concept that could run itself -- and the only way to do that was to build my business as if I were going to franchise it, even if I didn't.

Over the course of a year, I got organized. I had my staff spend hours building specific manuals for everything from training, prepping, setting up and handling customer issues to taking pictures of what food should look like going out. I spent thousands on registers that would simplify order taking and allow for better flow and consistency, and I even put in video surveillance.

I documented manufacturers and distributors and organized my ordering in such a way that I would know about price increases, decreases and any items that were out of stock. (To this day neither of my restaurants has ever told a customer we are out of something.) I even found a company to package all of my recipes. In addition, we created lists that allow for cleaning, checking numbers, food costs and percents -- all important when it comes to managing your business.

The implementation of these systems has allowed us to not only grow, but get through the tough times of business. I am honored to say that in 8 years, we have never scored less than 100% on a customer satisfaction food score.

So where am I going with all of this?

Franchising is about having a product that can be duplicated while maintaining the consistency that made it successful in the first place. The only way to do this is to set up procedures and guidelines.

There are many companies out there that are willing to go through the franchising process for you, but unless you have done the research on what is expected from you as a future franchisor, you run the risk of failing. Hard work alone will not get you where you need to be, but smart, hard work can.

Dino's seven tips to start the franchising process

  1. Make sure your concept can be franchised by researching other companies that are similar to yours. Look for the reasons they were successful and where they could have improved. A strengths, weaknesses, opportunities and threats (SWOT) analysis is perfect for this.
  2. Spend the time to set up your company to operate without you -- right now. If it can't run without you, it won't be a franchise. This will not only give you well needed days off, but the opportunity to work on your business and not in it.
  3. Trademark your name. This is a long process and you might not be successful on your first try. As a matter of fact, I had to change my company name to pursue my franchise dreams.
  4. Get help. Once you and your attorney feel comfortable with a name that will work, search for a franchising company that will fit your needs. I personally went with a company that will not only set up the documents, etc, but will also help market and sell my franchises.
  5. Get capital. If they say it will only take $60,000 to franchise, make sure you have double that number. More companies fail before they have a chance to succeed due to limited funds.
  6. Set your goals high, but not too high. What I mean by this is build your franchise company slowly and in such a way that it will be stable. My goal is 25 stores in 5 years. Moreover, don't be upset if some franchisees fail, because they will, it is just the nature of business.
  7. Be flexible. Realize not everyone is the same and understand that regardless of what mistakes you make, they will only lead to better decisions in the future.

The insight I offer here is only a small piece of the pie, based on my own experience. I suggest that you read as many books as you can. Talk to people who have been there and done that. Talk to the people that have helped you get to where you are; if it wasn't for them, you wouldn't be thinking about franchising.

Lastly, make no mistake: becoming a franchise won't be easy. Determine your success not by how many franchises you have sold, but by how many lives you have changed along the way.

There are many great quotes out there, but I agree with Michael Gerber when he says

The greatest business people I've met are determined to get it right no matter what the cost.

I'm assuming if you're reading this you are one of those people, so dream big and reach high and as Zig says, "I'll see you at the top."

EMyth Team

Written by EMyth Team

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