Strategies to make your business franchisable and profitable.

1. HOW TO
MAKE YOUR
TEACHING
BUSINESS
FRANCHISABLE
teachworks.
Strategies for building a
franchisable teaching business

2. Franchising is one of the most commonly used models for growing
service businesses. Household names like McDonalds, Subway,
Sylvan Learning Centers are all businesses that operate using the
franchise model.
If you own a successful education business you may have considered
franchising as a viable method for replicating the success of your
business. While franchising can be a suitable, capital-light model for
growth, there are several requirements that your business must meet
in order franchising to be successful.
In this guide we will discuss when the franchise model is suitable
and the requirements that your business needs to meet in order to
be successful as a franchise. Based on this information you an begin
taking the steps that are required to make your business franchisable.
I N T R O D U C T I O N
H o w t o M a k e y o u r Te a c h i n g B u s i n e s s F r a n c h i s a b l e

3. C H A P T E R
O N E
1

4. How to Make Your Teaching Business Franchisable
P A G E 4
Franchising is the practice of providing the right to use a firm’s
successful business model and brand for a period of time in exchange
for fees.
A franchise system has two main roles:
Franchisor
The franchisor is the owner of the franchise system including the
business model, intellectual property, and in some cases real
estate. A franchisor sets the direction for the franchise and typically
plays a key role in determining the operating systems that will be
implemented, marketing & branding, as well as qualifying and training
new franchisees.
Franchisee
A franchisee is someone who pays for the rights to operate a
franchise location and typically invests their money to cover the
startup costs. Franchisees are usually required to invest enough
money up-front to cover all of the start up costs for the franchise
location, as well as an additional fee for the franchise rights.
WHAT IS
FRANCHISING?

5. teachworks.
P A G E 5
Most franchises also require an ongoing franchise fee that is a
percentage of revenue. Many franchises also require a marketing
fee that goes towards marketing expenses that will benefit all of the
franchisees.

6. C H A P T E R
T W O
2

7. teachworks.
P A G E 7
Franchising is one of several ways to grow a business – so why would
a business owners choose to franchise? There are several distinct
advantages to franchising:
Faster Growth
Franchising allows you to grow your business faster than you could
using only your own capital. Because franchisees invest their own
capital to open a location, you don’t need to invest this money on your
own. This capital-light model allows you to grow as fast as you can
find qualified franchisees.
Local Knowledge
Franchising allows you to expand into markets that are unfamiliar
to you, but familiar to the franchisee. The local knowledge of the
franchisee is likely to make the business more successful.
Motivated Managers
Franchisees are owners of their franchise and are likely to be more
motivated to increase the success of the business than a paid
employee.
Lower Risk
Because you don’t need to borrow money to open franchises since
the franchisee provides the capital for their franchise location, your
business faces less financial risk.
WHY FRANCHISE?

8. C H A P T E R
T H R E E
3

9. teachworks.
P A G E 9
In order for a business to be franchisable your business concept must
not only be attractive to consumers – it also must be attractive to
potential franchise owners.
By understanding how franchise investors will evaluate your business,
you can identify whether or not your business is franchisable and if
not the changes that you can implement to make it franchisable.
While there are numerous factors that a potential franchiseowner will
make before investing in a franchise, there are four main factors that
franchise investors consider before any others.
Ensuring that your business meets these four requirements will
generate interest in your franchise and will allow it to receive further
consideration from potential franchisees.
WHAT MAKES
A BUSINESS
FRANCHISABLE?

10. How to Make Your Teaching Business Franchisable
P A G E 1 0
What do franchise investors look at?
Return on Investment
Investors generally look for at least 15% return on their investment
after all expenses including management salary.
Business Risk
The business model must have a proven track record of success –
ideally over multiple years and in multiple locations.
Growth Potential
Demand for the franchise’s product or service needs to have
increasing demand in the market of the new franchise.
Support System
The franchisor must provide support systems that help the franchisee
operate their business successfully. A strong support system helps
lower business risk.

11. C H A P T E R
F O U R
4

12. How to Make Your Teaching Business Franchisable
P A G E 1 2
THE SIX FRANCHISE
CRITERIA

13. teachworks.
P A G E 1 3
It’s important that your business is not only profitable, but it also needs
to provide a compelling return on investment. Because potential
franchisees need to invest their own money into the new franchise
location, they need to earn a compelling return on investment relative
to their investment alternatives.
Franchise buyers could invest their money in stocks, bonds, real
estate or other franchises. In order for them to consider your
franchise, your business model must generate a return on investment
that is superior to the alternatives on a risk-adjusted basis.
The return on investment of a franchise is calculated as follows:
ROI = Annual Profit / Total Investment in Franchise
In order for the opportunity to be attractive it should generate at
least 15% ROI. This is higher than other investment alternatives,
but also reflects the slightly higher risk of the business. So if your
business model requires an initial investment of $100,000 investors
will be looking for at least $15,000 profit – after all expenses including
management compensation and franchise fees.
A Compelling
Return on Investment1

14. How to Make Your Teaching Business Franchisable
P A G E 1 4
Not only do you need to have a compelling ROI, your business profits
must also be relatively stable over the past few years. If your profit
fluctuates significantly from one year to another, it will be much harder
to attract potential franchisees since the volatility increases the risk of
their investment.
You can estimate your business’s ROI by looking at your average
profit over the past few years and dividing it by the total investment
required to generate this profit (including investment in buildings,
software, etc.). If your ROI is not above 15% you will need to look
at ways that you can either increase your profit with the same assets
or decrease the total investment required to open a new franchise
location.

15. teachworks.
P A G E 1 5
Franchise owners are interested in reducing their business risk as
much as possible. One of the main reasons franchise owners don’t
start their own business is because they are trying to avoid the risk
of failure. For this reason it’s essential that your business model can
be reproduced in a different market and experience the same level of
success and that you have a track record to prove the effectiveness of
your business model.
The advantage of a franchise to a potential business owner is that
they don’t have to go through the time-consuming process of refining
the business model to make it work. They will expect that you have
refined the business over the years to create a successful model.
As a general rule, before considering franchising, your business
concept should have at least three years of operating with a second
location opened with similar performance results as the first.
By showing the success of the model over a period of years and in
more than one location, you are able to demonstrate to potential
franchisees that your model can be replicated over time and in
different locations.
A Repeatable
Business Model2

16. How to Make Your Teaching Business Franchisable
P A G E 1 6
The key to a successful franchise, however, is to have proven
systems in writing that can be taught to franchisees. The key
factor in making a business model repeatable is standardization.
Standardization means that all processes and procedures follow
the same standards or principles. Standardization requires that all
processes and procedures are documented. Standardization has
multiple benefits:
- Speeds up launch of new franchises
- Speeds up the training for new franchisees
- Speeds up training for new employees.
- Establishes a baseline from which processes can be refined and
improved for better results.
- Ensures consistent products or services across all locations
- Makes it possible to pinpoint the source of poor results in franchises
that aren’t following the procedures.
- Increases buying power for inputs resulting in lower costs.
In addition to standardization, your business must have operational
simplicity. This has the benefit of making it easier for franchisees to
learn and replicate, decreases errors and it makes your business
more efficient and agile.
For education businesses, software can play a key role in
standardizing your business. By requiring all franchises to use the
same software with the same settings you can ensure that locations
are being managed using the same consistent methods.

17. teachworks.
P A G E 1 7
As a franchisor, it’s essential that you’re able to provide value to your
franchisees that they wouldn’t receive if they were to open a business
on their own. The added value that you can provide include:
- Refined operational systems
- Proprietary systems or technology
- Brand name or reputation
- Marketing support & expertise
- Buying power
Each of these items provide something to the franchise owner that
they wouldn’t have immediately if they were to start a similar business
on their own. By strengthening your business in these areas you will
make your franchise more attractive to potential franchisees.
3
Added
Value

18. How to Make Your Teaching Business Franchisable
P A G E 1 8
Even though franchising is much less capital-intensive than
other means of growing a business, you will still need to invest a
considerable amount of capital before you’re in a position to begin
marketing your franchise opportunity.
These expenditures include market analysis, legal fees, marketing
materials to present your concept, advertising to promote your
franchise opportunity, resources and staff to handle inquiries, training
and support.
Financial
Resources4

19. teachworks.
P A G E 1 9
Even with a business that meets all of the requirements mentioned so
far, there is one factor remaining that can prevent your business from
being franchisable. That factor is you.
Operating a franchise system requires a certain type of personality
and management ability. If you’re the type of person that needs to be
in control at all times, or if you have difficulty sharing with others then
you will likely have a hard time building a successful franchise.
Operating a franchise system requires you to entrust others with
control over the operation of their franchise locations and it requires
you to invest and share in the success of the system.
Franchising is about relationships, and with most franchise
agreements lasting 10 years, it’s important that you are both
committed to long-term relationships and that you have the ability
to make relationships work. There is inherent tension in franchisor-
franchisee relationships so it’s critical that you have the necessary
skills to manage this – leadership, management, communication and
a strong resolve are all essential.
Franchisor
Fit5

20. C H A P T E R
F I V E
5

21. teachworks.
P A G E 2 1
To summarize the information in this book, to make your education
business franchisable, you’ll need to complete the following tasks:
1. Standardize and document your business processes.
2. Implement operational systems to increase efficiency and
consistency.
3. Refine your business model to generate a compelling return on
investment.
4. Develop sources of value for franchisees such as brand
recognition, proprietary systems, marketing expertise, etc.
5. Establish a track record.
6. Raise or save enough capital to cover franchise start up costs.
7. Develop your managerial and relationship skills or hire a qualified
manager with these skills
MAKING YOUR
BUSINESS
FRANCHISABLE

22. The key to building a successful franchise system tomorrow is to
begin preparing your business today. Even if you aren’t sure about
franchising in the future, making the changes to your business
suggested in this guide will provide you with the option to franchise
and will make your business more efficient and profitable.
C O N C L U S I O N
A B O U T T E A C H W O R K S
Teachworks is a business management system designed to help
education companies become more productive and efficient.
Teachworks is ideal for education franchises -- allowing franchisees to
use the same management system for more consistent management
and operations.
Teachworks also allows franchisors to manage and monitor multiple
location accounts from a single master account for better control and
convenience.
Learn more and sign up for a free trial at:
www.teachworks.com
teachworks.