From humble beginnings in his parent’s basement in 2011, Barry Hartman’s 505-Junk has become one of Vancouver’s great business success stories of recent years.
The company’s innovative service calculates a customer’s fee for refuse and recycling removal based on weight, using a unique hydraulic scale system. This one-of-a-kind approach to garbage disposal has presented Hartman and his business partner Scott Foran with the opportunity to grow using a franchising model.
Given the duo’s early success, we asked Hartman for 10 tips for starting a franchise.
10 Tips for Starting a Franchise
Step 1: Incorporate Your Businesses
Generally, when you start your business, you will incorporate a business and operate your brand name as “do business as”. If you decide to establish a franchisor model, it is common to incorporate a new business. This business will have different revenue streams, such as franchise fees and a royalty, and will incur different expenses.
Step 2: Understand the Business Model
When you establish a franchisor business, you are now responsible for a different set of activities. These activities may include consumer marketing, franchise marketing, employing staff at the head office, legal documents, supporting and coaching your franchisees and more.
Step 3: Organize Your Documentation
It is very important to be very organized as a franchisor. All your processes, systems, manuals, policies and other documents must be organized in an easily accessible location.
Step 4: Create an Operations Manual
You will be required to create an Operations Manual that clearly explains how your franchisees will operate their franchised business. Start by creating the skeleton, also known as a table of contents, and fill in each chapter appropriately.
Step 5: Create a Training Program
Now that you have created your Operations Manual, you are going to want to build a training program to train your new franchisees. This generally will consist of a one to three-week training program hosted at your Head Office, as well as an ongoing training program or system to support your franchisees.
Step 6: Establish Your Territories
Each franchise system is slightly different, and companies have come up with various ways on how to cut up territories. It is common to do it by postal code however you need to do what is best for your franchise model.
Step 7: Create a Disclosure Document
You are required to have a Franchise Disclosure Document (FDD) that you can hand over to prospective franchisees. This is a requirement in British Columbia. You will need to consult with a law firm, such as Gowlings, who specializes in franchise law. The purpose of the FDD is to disclose all information a prospective franchisee needs to see prior to investing in your franchise model.
Step 8: Create a Franchise Agreement
After receiving the FDD, a prospective franchisee will be required to sign a Franchise Agreement to seal the deal. Each franchisor will have a different Franchise Agreement specific to their system, procedures, and policies so it is important to consult with a law firm who specializes in Franchise Law.
Step 9: Create a Franchise Marketing Plan
Now that you are ready to sign franchisees, you need to create a franchise marketing plan to generate demand for your franchise model. As new leads contact you (by phone or through your website), you will begin to interview them to see if they are a good fit for your system. The interview process needs to be dialed in and consistent. This is very important as you only want to bring on people that you believe will be successful.
Step 10: Develop Your Staff and Systems
As you add new franchisees into your system, you will be required to scale your team and systems accordingly. You may be required to hire additional employees to run a sales centre (if you have one), to sell franchises, to manage your bookkeeping, and to support franchisees. Again, each Franchisor model will require different types of personnel and systems.
Barry Hartman
Co-Founder and CEO, 505-Junk
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