For landscape contractors looking to grow their businesses, franchising offers the advantage of bringing other talented people’s sweat equity into their own workforce. John Reynolds, president of the International Franchise Association’s Educational Foundation, uses the founder of Holiday Inn as an example. In the 1950s, Ken Wilson had a vision to create a chain of hotels across the country, but he quickly realized that he couldn’t build enough hotels fast enough to create the network he envisioned. He realized that he needed to find investors and partners who would join him in growing the business over time.
“That’s the essence of franchising; it's finding people who will share your passion and enthusiasm for your business and who will put their money and time and effort into making it a success,” Reynolds says.
But there are many criteria and obligations that a contractor must first meet to ensure franchise success.
1. Define your operating methods.
Business owners need to put everything they do to run their businesses from the time they turn on the lights in the morning to the time they turn them off at night into an operating manual, Reynolds says.
“Think about it like a turnkey operation because you're going to be turning over your know-how, your systems, the way you manage your supply chain and the way you manage your employees to your franchisee,” he says.
The business’s operation methods have to be transportable to other geographic markets, so contractors with a single location are probably not ready, says Bret Lowell, partner at DLA Piper Global Law Firm. “You have to prove to yourself that you can move from one location to another. Why grant someone the rights to replicate what you’re doing if it is not successful?” he says.
2. Get legal documents in order.
Contractors must comply with franchise laws and regulations, which vary from state to state. To navigate these specialized laws and compile the necessary documents, Reynolds recommends consulting with a franchise attorney.
“You have to make sure you’ve dotted the i’s and crossed the t’s as far as all of the legal framework for the business is concerned,” he says.
Contractors need to be prepared to answer detailed questions about their businesses in these documents that will define their relationship with their franchisees long-term, Lowell says.
“It’s a document written today that will control a relationship for many years. It’s not an easy thing to do. We’re saying it could be a 10- to 20-year term, and 10 years from now things could be very different,” he says.
3. Find the right franchisee.
When looking for that first franchisee, contractors should evaluate the financial history, market competition and company culture for a good fit.
When a franchisee joins that brand, they are really joining a family of those businesses, Reynolds says.
“There is a certain chemistry that goes with being a part of that,” he says. “I would say that the truism in our industry is: The most important thing you have to do as a franchisor is make sure you make that first choice of franchisee the right choice. The second most important thing you have to do is make sure you make the second choice the right choice,”
4. Be prepared to shift your role.
There are two schools of thought for franchisors: Some like to keep one hand in the service business so that they know what’s happening in the industry and they can put what they learn back into training and support for franchisees. The other philosophy is that franchisors step back and invest their resources into managing the franchise system, Reynolds says.
“You can think about it as the evolution of your business,” Reynolds says. “You may need to, at the beginning, continue to operate the service side of your business simply because it will provide you with cash flow. When systems get to a certain size, that’s often the determining factor for the franchisor to move out of their line of business and into the franchising side of things.” Franchising is less of an add-on to an existing business and more of a creation of a new business with a different set of priorities, Lowell says.
“If you want to be a franchisor, you have to stand in the shoes of a franchisee. Think about what will motivate them, because the way to be a successful franchisor is to have successful franchisees,” he says.