Franchise First Steps

Launching a multiunit operation requires careful planning. Follow these steps to sign—and support—franchisees:

Make Sure Candidates Are Ready Financially

Identify what makes a potential franchisee a good fit financially with a funding qualification. The form prospective franchisees fill out on The Dapper Doughnut’s website includes fields for their ideal investment timeframe and available liquid capital. In addition, the company’s vetting process includes credit and background checks.

Make It as Profitable as Possible for the Franchisee

To attract top contenders, run the numbers on your fee structure. “Are franchisees able to make good money at the unit level after deducting a reasonable royalty that will cover the cost of support and provide a profit for the franchisor?” says Mark Siebert, iFranchise Group CEO.

Cupcake chain Smallcakes charges a relatively low 3 percent royalty fee, according to co-founder Jeff Martin. The company also has minimal equipment purchase requirements and encourages individual locations to market on social media rather than charging a marketing fee.

Offer Cost Options

The Dapper Doughnut’s franchisees can choose to run their business out of several locations, including a lower-investment food truck and a mall kiosk. “A food truck is going to cost around $120,000, but you can own that for about $20,000 down—depending on your credit worthiness—and finance the balance,” says Managing Director Brian Pappas.