BUSINESS GROWTH – CAN YOU FRANCHISE YOUR BUSINESS?
Congratulations! You have succeeded in establishing your brand and now wish to expand your business.
- Franchise businesses have grown in popularity in recent years, and for a good reason.
- A franchise offers the security of a proven business model combined with the independence of owning your own business.
- Before investing time and resources into developing a franchise system, assessing your business’s franchise-able is vital.
- So what makes a business franchisable?
Here are 6 questions you should ask before you take the next step.
1. Do You Have a Proven Business Model?
- The process of franchising a business can be a lucrative one, but it has its risks.
- To ensure that you’re ready to franchise your business, you’ll need to make sure that you have a proven business model.
- This means that you’ll need to iron out any kinks in your business model and that you’ll need to be able to demonstrate to prospective franchisees that your business model works!
- A successful prototype and ensuring that your existing outlets perform well are also essential.
- If you can’t demonstrate these things, avoiding franchising your business is best.
2. Is Your Business Model One That Can Be Sold?
- Pitching your business to prospective franchisees is akin to making a sale.
- Since you have achieved great success with your business, certain qualities will give potential franchisees the confidence that they can replicate your success.
- These factors include a striking brand image, uniqueness, and an easy-to-understand business model.
- If you have received numerous franchise inquiries, that’s a good sign that others consider your business model attractive.
- This is why it is important to highlight these key factors when pitching to prospective franchisees.
3. Can Your Business Model Be Replicated?
- Several factors contribute to a business’s success, and not all of them can be easily replicated by a franchisee.
- To determine if your business is franchise-able, you need to look at the reasons behind your business’ success and ask yourself if someone with just an operations manual can replicate them.
- For example, suppose your business is successful because of an excellent location or manager.
- In that case, it may be challenging to replicate that success through franchising.
- However, if your business is successful because it offers a unique product or service in high demand, it may be more franchise-able.
4. Can Your Franchisees Get an Adequate Return on Their Investment?
- When considering a franchise opportunity, it is crucial to consider the potential financial gain you may realise and the potential income of the franchisees you will be working with.
- A successful franchise system is one in which the franchisees can earn a good return on their investment.
- You will be expected to provide them with projections based on sound research, and these projections will need to be competitive with other investment opportunities.
- If you can do this, the franchise system will likely succeed.
5. Are You Committed?
- When it comes to franchising your business, there are a few things you need to keep in mind.
- First and foremost, franchising is not a hands-off approach – you’ll need to be actively involved in supporting your franchisees if you want to see success.
- This requires significant time, effort and resources, so you must be prepared to do the work.
- It is also essential to maintain a good relationship with your franchisees; if you’re not committed to providing them with the support they need, you’re not ready to franchise your business.
6. Do You Have the Resources?
- Franchising can be a great way to expand your business, but it’s important to remember that it’s a costly process.
- You’ll need to invest in developing an operations manual, an advertising programme, and training materials, retaining a lawyer and having a good franchise agreement drafted.
- All these require time and capital investments, so if your business needs to be in better financial shape, it’s not the time to start franchising.
Franchising can be a great way to grow a business, but it’s essential to be aware of the potential pitfalls.
A business not well suited to franchising may not see the success it expects and could even damage the brand.
Remember to conduct your research before committing to a franchise system.