Larger companies need to address more complex issues such as channel conflict, anti-trust, and resource allocation issues. And obviously, this entire plan needs to be subjected to rigorous financial analysis and scrutiny to fine-tune the strategy for growth.

Once the growth plan is in place, the franchisor needs to develop the proper legal documentation.

At a minimum, the franchisor will need a franchise contract, an offering circular (as required under FTC Rule 436), and, depending on where franchises are being sold, and state registrations.

There are many different business issues that must be addressed in a effective franchise agreement, and the decisions made regarding these issues will ultimately dictate the franchisor's success.

Quality control for a new franchisor involves the development of an operations manual. This manual must contain not only the systems used by the business, but also the checklists, policies, procedures, and tactics that will allow these systems to be uniformly enforced. Moreover, these manuals must be careful to avoid the creation of an agency and must address issues that could create claims of negligence if the franchisor is to maintain an effective shield from consumer liability.

Finally, the new franchisor must develop the ability to market and sell franchises. That requires knowledge of how to attract the prospective buyer and the necessary materials (brochures, mini-brochures, videotapes, etc.) that will help make the sale.

Moreover, since the franchise sales process is highly regulated, the franchisor needs to be educated in proper sales, disclosure, and compliance techniques.

Every new franchisor quickly learns that when they turned to franchising they entered a completely different business. Regardless of how the franchisee makes money, the franchisor has two roles in life:

In addition, of the two, ensuring the success of the franchisee is the most important.

Properly structured, franchising can allow small companies to more effectively compete with much larger competitors. It can also allow large companies to gain the advantages of highly motivated unit management while reducing overhead. As such, franchising is an option that more and more companies should explore.

The key to success in franchising is successful franchisees. Without successful franchisees, no franchise system will last. Nevertheless, if you can put the interests of your franchisee first, those same franchisees might help you become more successful than you have ever dreamed.