When Genevieve Weeks opened her children’s dance studio, Tutu School, in San Francisco in 2008, she quickly figured out that she’d hit on something good. “By 2009, I’d opened a second location, and that one also did quite well,” says Weeks. “I realized that this studio could thrive in a lot of communities.” At the same time, she says, the reality of opening more locations was sinking in: “It’d be double the payroll, double the rent,” she remembers thinking. That’s when she started to explore franchising.
The franchisor business model made sense to Weeks. “To trust other people with my business, I knew I needed a say in how it would be done,” she says. As the franchisor, she would own the trademark and operating system for Tutu School. Franchisees would agree to run the business they purchased according to the rules and boundaries Weeks set up. In exchange, they’d get a ready-made, successful business model.
Weeks sold her first franchise in 2013. Today, there are 43 Tutu Schools, with a dozen more reserved for development by current owners.
If you’re considering this route to growing your own studio, Weeks and franchise experts have some advice.
FranChoice franchise consultant Tana Hutchinson recommends starting at the International Franchise Association website, franchise.org, where you can learn everything about franchising, from legal issues to current news.
It’s also important to question whether you even want to become a franchise, says Hutchinson: “Do you have everything in place to even begin this process?” To understand whether franchising makes sense for you, on both a business and personal level, Bibby Group founder Nick Bibby recommends undertaking a feasibility study with the help of a franchise consultant. “That’s the best way for business owners to understand themselves in the role of the franchisor before going forward,” he says. “Franchising is a highly demanding and competitive industry. Franchisors must be excellent teachers, mentors, nurturers—open to and capable of caring for franchisees.”
Another part of your due diligence is determining if you have a proven operating model. “You can’t define ‘proven operating model’ only by a certain margin of profitability,” Hutchinson says. “You need to show you have a business with positive cash flow.”
Put your processes in place
What a franchisee is paying you for is not just a trademark or branding, but a complete business system. “So much of the work is looking at the studio itself and asking, ‘What does somebody else need in order to open this?'” says Weeks. “We looked at our curriculum and how we would not just train other studio owners, but give them the tools to train their own teachers consistently.”
For some, hiring a franchise development team to help transform their business into a successful franchise may make the most sense. “We were able to bootstrap it,” says Weeks, though she does describe the process as time-consuming. “My team and I would say, ‘OK, let’s work on this project’—but then it would lead to 10 more,” she says. “We had to figure out logistical things, like ‘How does our proprietary software break out for an individual owner? How do we set up websites for each school?’ Not only do you need marketing collateral—consistent branding even down to the postcards—but you need a consistent style guide for everything that’s branded.”
Find a franchise attorney
“The Federal Trade Commission regulates the franchise industry,” explains Hutchinson. “So you’ll need a franchise attorney to help you navigate that.” Weeks actually thinks finding a good franchise lawyer is the most important part of franchising your business. “It’s a very specialized area of law, with lots of rules and restrictions, so you can’t just read Franchising for Dummies,” she says.
Decide what to offer your franchisees
Weeks’ franchisees are responsible for the build-out of the business and operational expenses, like rent, payroll and insurance. Weeks’ franchise disclosure document estimates an initial investment of $75,700 to $137,200 (including the $36,000 initial franchise fee). Tutu School also charges a monthly royalty fee of 6 percent of gross revenues. In return, franchisees get licensing to be a Tutu School, with access to the brand and logo and curriculum. “They also get a huge library of content for marketing and outreach materials, guidance and training, curriculum training and tools for training their teachers,” she says.
Twirl, Tutu School’s own online studio-management system, serves as a document depository for content Weeks wants every franchisee to have access to. “We take care of their music licensing, their website, a ballet story curriculum,” she says. She also offers her franchisees what she calls “a ton of ongoing support,” like weekly social-media content that they can use with their clients and recital choreography.
Find the right first franchisee
“It was a lot harder than I imagined to find the perfect first franchisee,” Weeks says. “There were people we really loved who got cold feet, and a couple people who were ready to jump but who didn’t feel like the right fit.” Her eventual first franchisee found Tutu School through a Facebook ad. (Her second walked by the original studio.) Waiting to find the right match paid off: “Our first franchise owner now has eight Tutu Schools, and the enrollment for some of those has surpassed my San Francisco location,” says Weeks.
Initially, Weeks relied on a franchisee application from her lawyer with a set of questions to ask potential franchisees. “It’s definitely important to know why they want to do this in the first place and where the capital they’d invest would come from,” she says. “Some franchisees get a loan or line of credit. Others use savings or investment from families. Really, we just want a clear understanding of the runway they’ll be able to give their business to launch, and what pressures they might be putting on their personal financial situation to start this business.”
Now, with seven years of franchisor experience under her belt, Weeks has a better handle on what to look for. “I really think one of the things we’re looking for most is an entrepreneurial spirit,” she says. “We want people who can probably open a studio on their own, but who really believe in our mission and purpose and know it will be exponentially better to do it with us.”
Have a franchisor community
“I was really lucky—one of my best friends had franchised the company Bella Bridesmaids to some 40 locations first and then sold it,” says Weeks. “She was an invaluable mentor.” Slowly, Weeks built a community of fellow franchisors she could go to for advice and support. “These franchise buddies are in similar situations, with more stages of growth still to go,” she says. “We’ll have calls every couple of months and talk about how to handle specific situations.”
Know that it isn’t over after you’ve sold a franchise
“I did kind of think, ‘We’re going to create these materials, and that’ll be it,'” says Weeks. “But for anyone who thinks it’s a passive-income situation, that’s definitely not the case. I visit every location once a year, plus there’s a lot of ongoing support. It might be something as simple as adding new features in our software or updating curriculum.” Yearly site visits offer Weeks the chance to make sure a location is running smoothly and that the studio feels on-brand with her original philosophy. “It’s everything from walking in and seeing how the studio is set up, to seeing if the staff greets families the way we want, to talking about the winter recital,” she says. Most important, though, is observing the teachers. “It’s a way for us to make sure the quality of the classes remains high,” she says.