Now that you have a successful business, perhaps you are considering expanding. One great way to expand is to franchise. Think of all the famous brands that have used franchising to accelerate their growth and build their brands nationally or even internationally. They all built on a business that had already proved itself. Is your business franchisable? Ask yourself the following ten questions to find out.
For people to be interested in buying a franchise based on your business concept, your concept needs to have a proven track record of success. It’s also important to have an experienced management team. Without this established reputation, nobody will be interested in buying into your concept.
Now that you have a successful business, perhaps you are considering expanding. One great way to expand is to franchise.
A franchise is nothing without a memorable brand. What makes your brand unique? Will it appeal to consumers across the country? Is there the potential to expand into other countries? If the answer is yes, you might well have a franchisable brand on your hands. I
You can’t approach franchising as a way to fund a new business. Don’t even consider franchising if your business is in trouble. You will be expecting franchisees to pay franchise fees, so the business needs to generate enough income for franchisees to pay themselves a decent salary after they have paid you and settled their loan.
As a franchisor, it’s essential that you get professional advice to build a franchise infrastructure.
You wouldn’t be in business without the prospect of a reasonable return on investment, and your franchisees will have the same expectations. Your investment will be in the development costs; your franchisees will be investing in setting up their individual outlets of your brand. As a rule of thumb, return on investment should be obtained within three to four years.
Remember that building a franchise means building a brand. Your brand needs a unique selling point to set it apart from your competitors’ products or services. Perhaps you have a unique recipe, or perhaps your offering combines quality with affordability in a way that nobody else can match. Whatever your unique selling point is, it is what will give you the competitive edge to succeed in the market.
As franchisor, you need to do your market research thoroughly. You need to establish that there is demand for your product in different areas and that this demand is likely to grow. Otherwise you risk being an overnight sensation and losing your investment.
Every successful business has its own way of doing things, and your franchise is no exception. You will develop your own set of systems, procedures and skills based on the specific context of your business. It’s best to develop an operations and procedures manual to document this process. This will help keep the quality of your product consistent, which is vital to your reputation. Consumers will expect the same quality from your brand wherever they find it.
It’s possible that your franchisees have no experience in your particular business sector, so you have to be able to train them up reasonably quickly. Imagine how disastrous it would be if your new franchisees starting operating under your brand before they were sufficiently prepared – your reputation would be ruined overnight. Aim to have them up to speed within three months. Franchisees will not be making any income during the training period, so this needs to be taken into account when working out the total franchise cost.
As franchisor, you have to commit to supporting your franchisees until they can stand on their own feet. You have to provide them with the facilities and skills to succeed. Nothing less than absolute dedication is required from you! Growing a successful franchise is above all a lot of hard work.
The most successful franchises operate according to a culture that encourages learning and participation. Franchisees are not your employees, they are your business partners and will not take kindly to a dictatorial approach.