Steps for Converting a Business into a Franchise

Posted on: October 21, 2020 by RMS Hospitality

From drawing up a disclosure document to figuring out what decorations will go up inside a store, turning a business into a franchise is all about the details. The payoff can be lucrative, as franchising is one of the best ways to spread a brand and grow a business quickly.

According to the U.S. Census Bureau, franchises make up more than 10 percent of businesses across 300 industries since 2007. Franchises account for more than $1.5 trillion in revenue and $153 billion in payroll disbursed. With that in mind, franchising a business, no matter the industry, could be a profitable endeavor to expand a brand.

Here are six tips for small business clients in the restaurant industry who are thinking about turning their company into a franchise.

Build an Infrastructure

Franchise infrastructure for small businesses, such as corner cafes and small restaurants, includes everything franchisees will need to open and operate a successful business. This includes a franchise disclosure document, franchise agreement, operations manuals, training and support, brand policies, and more. Together, these resources make up a franchise system—the tools and programs that make a brand more attractive to potential investors.

Objective Business Analysis

Clients should conduct an objective business analysis to determine if they should, in fact, investigate franchising. Clients can consider if their products or services are unique and competitive enough to profit within multiple markets and attract other investors. Is the business making enough profit to justify the franchise expansion? Is the business model easy to replicate for other business leaders?


Businesses will need sound financing to convert a business into a franchise or expand an existing franchise. Businesses need a plan to show prospective investors how they will use the money to provide a fair return, and clients will also need access to reliable funding sources.

Marketing & Branding Manual

A manual helps the franchisee attract more customers and additional brand equity for a business. Clients will need to clearly show how to use and develop the company brand and image as part of a successful branding strategy.

Investing in the Right Insurance

Potential franchisees are considering their future as a brand and successful expanded company. But to ensure there is a future ahead, clients in the small business industry have to have effective insurance, such as our Franchise Select Program, that provides well-rounded coverage for potential liabilities.

One small claim could end up sidelining plans to franchise, so having this coverage alleviates those concerns. Work with clients to ensure they have the right coverage before they take their first steps toward expanding their operations.

About RMS Hospitality Group

At RMS Hospitality Group, our expertly crafted policies are written specifically for the hospitality industry. We offer custom-tailored solutions to meet any venue’s specific needs. For more information, contact our experts today at (888) 359-8390.

Posted in: Franchise Select

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At RMS and associated firms, business continues as usual. Our staff is remote-capable and available to handle all partners, brokers, and insureds at the present time. Contact us today!