---
title: "How To Create and Grow a Franchise"
url: https://burnaze.com/article/320df01f-3a25-4d11-972e-794188877acc
source: "1851 Franchise"
original_url: https://1851franchise.com/how-to-create-and-grow-a-franchise-2715631
category: "Franchise Industry"
industry: "Franchise Industry"
published: 2021-05-04T14:09:00.000Z
modified: 2026-11-01T01:40:23.707Z
image: https://newimage.1851franchise.com/cdn-cgi/image/quality=85,format=webp,width=1280,height=720/story/featureImage/215a36ed6791b2f64f89dafe2a53e1e86727.jpg
---

# How To Create and Grow a Franchise

**TL;DR:** Creating a business worthy of franchising requires a strong and consistent sales model, and significant capital is needed to establish a franchise.

*originally published in 1851 Franchise on 2021-05-04. [Read the original](https://1851franchise.com/how-to-create-and-grow-a-franchise-2715631).*

## Key facts

- Strong sales model required
- Significant capital needed
- Good franchisees key to growth

## Story

Creating a business worthy of franchising requires a strong and consistent sales model. This typically involves a unit or pilot location that is performing well and the public is taking to it. The business should have already duplicated the concept a few times to create a replicable model that has been proven to work anywhere.

To create this replicable model, first-time franchisors need to heavily document how they've successfully established the concept. This includes creating a system of procedures and operations that somebody else can follow. This may not be polished or totally complete, but it should document how the business started, how it should be run, how it should be staffed, and more.

- An operations manual with product lists
- Employee handbooks
- Vendor tips
- Storefront appearance guidelines
- And more

## Franchise planning

Once a concept is ready to franchise, the next step is to create a business plan that outlines the number of franchises a company wants to sell, which markets they are targeting for growth, how fast they want to expand, and more. Prospective franchisors will also need to evaluate the amount of staffing and financial capital required to successfully sell those licenses and onboard incoming franchisees.

It is essential to remember that creating a franchise requires significant capital. This includes legal fees, operation manual costs, trademarking, training, registration, FDD creation, marketing, and more. Typically, a franchisor does not become royalty sufficient until around 75 to 100 open units.

Then, it's time to create a Franchise Agreement and Franchise Disclosure Document. These documents outline the responsibilities of franchise owners, fees and tax responsibilities, financial performance history, rules pertaining to trademarking, and much more.

Creating an FDD requires outside help, including a legal team and accounting team. All financial statements and spreadsheets will need to be in order. The FDD will also need to properly outline the initial investment to open specific locations.

## Growth strategies

Once the franchisor starts selling franchise agreements, there are several ways to promote healthy growth. A common mistake emerging franchisors make is taking the first person who is willing to write a check. This is the wrong thing to do – the first few franchisees will be the validators for future franchises.

From a support level, young franchise brands also need to grow around where they are based. If a franchisor is based in Portland, Oregon, for example, the first few franchisees need to be in the Pacific Northwest to promote regional growth.

Emerging franchisors need to hire a good, tenured corporate support team to provide ongoing support and training to all new franchisees. If growth stalls after the first few locations, it is recommended to take a hard look at the marketing strategy for bringing in new franchise leads.

Franchisors should consider brokerage groups, digital marketing tools, as well as tier referral systems where franchisees can refer other franchisees to the brand. Finding the right franchisees is key – if you have a good franchisee who believes in the brand and has the operational and financial capacity to expand into multiple units, it can be super advantageous to the overall growth of the brand.

## Entities

- 1851 Franchise (publication)
- unit expansion (topic)
- franchise growth (topic)
- Franchise Industry (sector)
- IFA (company)
- franchise planning (topic)

---
Originally reported by 1851 Franchise (https://1851franchise.com/how-to-create-and-grow-a-franchise-2715631). Summarized by Burnaze (https://burnaze.com/article/320df01f-3a25-4d11-972e-794188877acc).