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Money Advice for franchisors: Don’t sell the product – sell the model

Employees of 2nd Call in Vegreville, Alta., flag potential dangers underground.

Ian Jackson/The Globe and Mail

The #Takeoff  series is about crowdsourcing issues important to Canadian small businesses. They tell us about their defining moments and we write about their stories, the issues, and strategies for success or how to overcome obstacles.

Tell us your business's takeoff moment: tgam.ca/takeoff

Rocky Pooke, owner of Vegreville Electric in Vegreville, Alta., routinely used the One Call system, which notifies utilities that digging is planned so they can map out existing underground lines to prevent injuries to people and damage to infrastructure. But when a utility stopped providing information on lines it had not installed, he could not find a company that could locate underground hazards that had not been registered or had been abandoned. So he started 2nd Call Corp. with his life savings. His company locates underground power, water, sewer and gas lines or other potential hazards for industrial or residential needs.

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Read his story here.

When he wanted to expand, he put together a franchising plan that would allow buy-in for about $68,000. He now has eight franchisees in Alberta and sees potential across North America, as well as abroad.

But experts warn franchisors about expanding too fast.

Here are seven tips from the Canadian Franchise Association:

1. Make the switch from owner/operator to partner and coach

Franchisees are not managers or staff; they are business partners. This is a big shift in thinking and an ongoing learning opportunity for most franchisors.

2. Become familiar with franchise legislation in all jurisdictions where you want to expand

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In Canada, proper legal documents will have to be in place for each province.

3. Develop compelling recruitment materials emphasizing unique selling points

Remember, you are not selling a product or service to prospective franchisees – you are selling a business model.

4. Provide appropriate operational support to partners

Things to consider include: training programs and operating manuals; mechanisms for gathering feedback; benchmarking satisfaction; measuring performance.

5. Expand your support network as you grow

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Professionals who may help include accountants, bankers, franchise lawyers, marketing agencies and consultants.

6 .Support the brand in new markets

As you work to create brand awareness at the corporate level, consider helping franchisees tailor their local marketing strategies to connect with customers in their areas.

7. Understand financial implications and resources

Develop relationships with lending institutions and investigate financing options available to you and to franchisees. Always make sure your growth can be sustained financially.

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