Do You Offer Franchisees a Starter Kit?

Do You Offer Franchisees a Starter Kit?

As a business owner, you studied, planned, borrowed (probably), worked hard and developed a successful, repeatable business model. Perhaps you already sell franchises or have arrived at the point where you know you should. With the entrepreneurial spirit deeply ingrained in the American culture, you’ll receive many requests for information about your franchising opportunities. How often do potential investors ask if you offer a “starter kit” or scaled down version of your business?

Franchise investors come in all economic shapes and sizes. Some have what it takes to buy into a full, million-dollar-plus build-out of your brand if your brand is a brick-and-mortar retail or restaurant. Others may be viable investors of a lesser degree but might not have the ability to raise the capital to buy into your full-sized franchise offer. But does that mean you should simply send those smaller investors on their merry way? If your product and brand are amenable to it, why not offer a “starter kit” for the smaller investor?

What Is a Starter Kit for Franchisees?

A lot of profits could be left on the table if you overlook the potential for sales in unconventional venues. For example, let’s say you have a popular pizza store brand. Your model is for new builds in developing shopping centers with full-service seating and a fairly large menu. What if your investors had the opportunity to own a starter kit of your restaurant brand that set up in food courts in malls and airports? Could you use the extra exposure if a franchisee could bring it to sporting events in a food truck or concession cart?

Rather than a restaurant, what if you marketed trendy clothes in malls? Are you missing out on revenue by not providing a franchisee the chance to own a booth outlet to set up at concerts, flea markets and street fairs?

Starter kits are like miniature outlets for your brand. They allow the franchisee who would otherwise be unable to invest in your brand the opportunity to start small and work up from there.

Starter kits, in this conception, are miniature outlets for your brand. The franchisee who would otherwise be unable to invest in your brand now has the opportunity to start small and work up from there. If the franchisees follow your business model (which you must modify for the starter kit version), they can get their feet wet in business ownership while testing the waters to see if the lifestyle — or your brand — is right for them. If they do well, they may move up to your full-scale franchise model.

How Do I Set Up Starter Kit Franchisees to Succeed?

Any aspect of business, large and small, is filled with government and contractual minutia that, if overlooked, can make business life a nightmare. With so many codes, regulations, tax considerations, banking methods, and so on, to keep in mind, good legal counsel is a must. While your main franchise model may include a starter kit designed as an information packet to help new franchisees comply with rules and regulations and to market their business, a scaled-down business model starter kit is a dog from a different litter.

To give your franchisees a head start to success, you’ll need to determine the contractual relationship, fees as well as how much equipment, stock and other materials will go into the kit. This is where a law firm experienced in franchise law can be a life saver.

Have questions about franchise options? Contact Us!

Sheltonpower & Associates exists to help both franchisors and franchisees prosper. With decades of experience in franchising, we help tailor strategies and know how to keep your business compliant with all pertinent laws. Most work can be handled on a flat-fee basis. Before you embark on starter kit franchises, contact us for a free initial consultation.