7 steps to becoming a successful franchisor: you need a lot of support, a lot of capital, and a lot of expertise.

Author:Hughes, Alan


SMALL BUSINESS OWNERS OFTEN think about franchising out their model in hopes of reaping great returns. However, for every successful fast-food, hotel, or daycare franchise, there are scores of others who failed to have the proper measures in place to become a successful franchisor. "It's harder than people think. You need a large amount of royalties to make you successful," says Ja Ja Ball, president and co-founder of Colbert/Ball Tax Service. Founded in 1995 in Houston with one location, Colbert/Ball Tax Service now has 320 locations in 23 states. The company's model is built off of a low cost franchise system--$15,000 for a franchise--with the goal of creating franchise owners that can generate $100,000 plus in four months during tax season.

Ball offers the following advice for would-be franchisors.

1 Have the proper capital to invest to build a franchise system that lasts. "When you build a franchise system, there are a lot of hidden costs you may not be aware of," he says. "You have to be able to have the right people, and the right amount of capital to put into your marketing program and legal costs related to your FDD [Franchise Disclosure Document]." The FDD is a legal document which is presented to prospective buyers of franchises in the pre-sale disclosure.

2 Choose an A-team to operate the system. While most franchises hire a low-wage workforce for operations, the franchisor has to have more costly talent and expertise to ensure success--attorneys, franchising experts, and other specialists.

3 Research your top competitors and develop your niche in the industry. "One of the first things we did was to evaluate what our competitors were doing--where were...

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