How to Franchise a Bakery
March 15, 2017 1:53 PM
Fresh percolating coffee, the scent of warm bread baking in the oven. Who doesn’t love stopping in a bakery for some warm treats? As a bakery owner, you know what a smart business it is to focus on baked goodies like bread, cakes, croissants, pastries and pies, but did you know that you can grow your bakery even more by becoming a franchisor?
The baking industry is popping with an estimated annual revenue of $3 billion and other bakery companies have found success as franchisors like Great Harvest Bread, Gigi’s Cupcakes or Corner Bakery. Why not get in on the action?
Besides the popularity of baked goods, the fact that the cost of ingredients for a bakery tends to remain relatively stable also contributes to its success as a franchise. By allowing other entrepreneurs to buy into your business, you can expand your image and your reach. Not every bakery is franchisable however, and there are important steps you should take to be successful with franchising. Consider these tips on franchising your bakery.
Is your bakery franchisable?
The first decision you need to make is of course whether or not your bakery is franchisable? Having a successful bakery is not enough to secure success as a franchisor. There needs to be a large demand for your unique service and your concept/brand needs to be easily duplicable in other places. If the success of your bakery stems from your special touch in the kitchen, then other units might not do as well without you in the kitchen. If you like to be hands-on in all aspects of your bakery then running a franchise business might not be the right fit for you.
You should also consider whether you have the right personality for being a franchisor owner? Running a franchise takes a different set of skills that it does to run one individual bakery. You will be involved more in marketing and sales and overall development of your program instead of the day to day running of the bakery. Ask yourself, will I truly enjoy taking on this new role?
Is franchising the best strategy for your bakery?
Becoming a franchisor is not the only strategy for growing your bakery business, so it is important for you to consider all your options before leaping into anything. It is also a good idea to try expanding on your own first. Try opening up a new location first to make sure there will be a demand out there for your products.
If you do your homework and are confident that franchising your bakery is the route you want to take then there are certain steps you will want to take.
Steps to take to franchise your bakery
Consider the financial investment you will need to start franchising. Working with a franchise lawyer and a franchise consultant can help you figure out how much that will be and if you can comfortably afford that price. You don’t want to hurt your current business in your attempt to franchise it.
Develop a 5 year business plan that outlines your company’s growth and strategy. You want to make sure that the steps you need to take to become a franchisor fit well with your overall business goals and objectives.
Develop franchise operation manual and training programs. In order for you to be successful, you need your franchisees to be successful too. To ensure that they are, you need to develop robust operations manuals and training programs to help guide them on how to run their franchise unit. You need to give them all the proper tools and support to duplicate the success of your original bakery. You need to decide how much support you are going to give them and what rules they need to follow. Will you expect your franchises to buy all their ingredients directly from you? Will you set certain restrictions for the design of the store? Will you offer advertising help?
It is important also to set the fees your franchisees will pay you. Typically there is a franchise fee, which is usually a flat fee that the new franchisee pays up front when they sign the franchise agreement. And then there are royalty fees. This is a percentage of the franchise unit’s gross sales and is typically paid on a monthly basis. Sometime a franchisor will also add on other fees for advertising or systems management and technology.
There are also a lot of legal documents you have to fill out as well to be able to sell franchises. You will need to develop a franchise agreement and a franchise disclosure document and file the appropriate state and national paperwork. It is advisable that you fire a franchise lawyer to help you navigate all the paperwork.
A franchisor is only as good as its franchisees so you need to set up a strong infrastructure to handle both the selling and supporting of any franchises. You will need a marketing plan to attract potential franchisees and you will also need a sales force to close the deal with them. Think about the tools your new staff will need to bring in new business.
Remember that becoming a franchisor is not a quick get-rich scheme. It is meant for business owners who are really invested in growing their brand and helping other entrepreneurs become successful business owners. It can take anywhere from six months to a year to get your franchise program up and running. Unfortunately, franchisors often fail because they don’t properly estimate how much money it takes to develop a franchise program or they rush through the whole process without properly considering whether their bakery is right for franchising in the first place. Doing your homework at the beginning of this process is crucial for your success.
All of this can seem a bit overwhelming, but don’t worry. There is help out there for you. A franchise development firm can assist you with all areas of franchise development. If you decide to go that route, make sure you do a lot of research and interview a few franchise consulting firms before you pick one. You want to make sure that they have your best interest at heart. You want to work with someone who is as excited about your brand as you are.