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How to Franchise Your Drug and Alcohol Rehab Center
Franchising your rehab center can provide you with opportunities to expand your business and increase profits. The Federal Trade Commission defines a franchise as a business relationship with three primary components:
use of a common name or trademark
presence of significant operating assistance or control
required payment by the franchisee
Starting a franchise has many benefits, including increased capital, and reduced risk and time to expand.
How to franchise your rehab center
If you are interested in franchising your drug and alcohol rehab center, here are several steps and considerations you can make:
Assess your business
Try to determine if your business is ready to be franchised. You can assess your profitability and a number of other factors, including:
Concept: Most successful franchises have a unique approach to a familiar service. Try to identify what makes your rehab facility unique and how that can translate into an identifier for your franchise. This also means your unique aspect should be something that can be systematized and replicated, without your presence necessary.
Finances: Having a couple locations is important before you try to franchise your business. This shows that you have the financial standing to expand and that your concept can be duplicated.
Research: Try to conduct market research to gain evidence that expanding is a good idea. Assess whether there is enough demand, where that demand is, and how you might do in the marketplace among competitors.
Role: Once you franchise your business, your role will change from the leader of a business to selling and supporting franchise owners. This means you will largely move into a teaching, support, and sales role. Be aware that for each franchise that opens, things will be done a little differently and you will no longer have complete control over it.
Determine legal requirements
In order to legally sell franchises anywhere in the United States, your business must complete and successfully register a Franchise Disclosure Document (FDD) with the Federal Trade Commission. This process requires you to provide information about your business.
Your FDD must be prepared and issued to comply with federal and state franchise laws, be specific to your business, and competitively position the franchise that you are offering.
Certain states also have their own guidelines to follow, with California and Illinois among the most strict. To help you navigate the process, you can consider hiring an experienced franchise consultant or franchise attorney.
Make important decisions
There are many decisions you will make as you fill out required paperwork to become a franchise. Some considerations include:
Franchise fee and royalty percentage
Term of your franchise agreement
Size of the territory you will award each franchisee
Geographic area where you are willing to offer franchises
Type and length of training program you will offer
Business experience and net worth franchisees need
Whether you want an owner-operator for each unit or area/master franchisees who will develop multiple units
Create your operations manual and register your trademarks
You will need to prepare a franchise operations manual that you will provide your franchisees. It should include:
Your brand purpose, goals, and vision
How to prepare to open the franchise location
Product and service requirements
Designated suppliers and inventory requirements
Marketing and administration requirements
Because your entire franchise system will revolve around your brand’s trademarks, including licensing them to franchisees, registering your trademarks with the United States Patent and Trademark Office is an important part of the franchising process.
Register and prepare
Once your paperwork is ready, you can submit it. Prepare to wait as your application is processed. You may also receive a request for more information. Once the FTC receives your paperwork, it must also be approved by your state. In total, the process can take several months to complete. FDDs are not registered at the federal level. Rather, they must be registered within the franchise registration states at the state-specific level.
While you wait, you can hire additional staff that will be needed for the processes to follow. There are a number of services and aspects of support you will need to provide your franchisees, including:
ongoing advertising support
access to approved suppliers with purchasing discounts
variety of “back room” services
Create Your Franchise Sales Strategy and Budget
When budgeting, consider costs associated with building your franchise sales website, building your franchise brand story, franchise PR that will validate your brand story, training and supporting franchisees, and your franchise sales goals. Your costs will directly reflect your franchise sales goals and whether or not your brand has organic reach with customers.
Once you qualify to sell franchises, you will need to find buyers. Consider attending franchise fairs or hiring independent franchise marketing firms to help locate investors.
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