Does Your Business Fit The Franchise Model?

Published by Erin Murray on

Most businesses can be franchised, but should they? At the core of every successful franchise needs to be a profitable business. Franchising offers an array of opportunities for business owners to take advantage of to grow their business. Franchisees are generally very motivated to succeed, thus bringing in more revenue. Some believe franchising their business is a quick fix to get more capital and solving any issues they may have, however this is not the case. Done properly and strategically, moving your business to a multi unit operation can be very fruitful and rewarding.

The first thing you need to do before even thinking about franchising your business is understanding if you and your business are ready. You need to assess how committed you are to growing your business, and identify if expansion is feasible. Can you actually franchise your business? Are you able to duplicate and sell it?

Business decisions should come from an analytical point of view rather than emotional. After researching, and deciding this is the right move for you, you need to identify if you are financially able to do this. A lot of preparation work goes into getting a business ready for franchising from legal documentation, system processes, marketing and trialling can cost anywhere between $30,000- $75,000+ so it is really important you research whether this is a feasible option for you and your business. Another thing to consider is your obligations as a franchisor, how will you provide support and resources to your franchisees?

There is a lot to consider before franchising your business, so it is well worth doing a lot of research to understand if turning into a multi unit approach is right for your business.

Find the Right People!

Having a great business involves having an even greater team. If you are considering franchising, you’ve obviously already had a great team to get you to where you are. When franchising it is really important to be selective with who you ‘grant’ your franchise too, rather than just selling to anybody and everybody. It is really easy to find people with capital, however recruiting the right franchisees is one of the most important parts of your organisation.

Don’t Expand Too Quickly

Economies of scale are a really great thing, however in franchising this can cause quite a problem if you are on the bad side of this. Growth is important for business, and when franchising it is tempting to rapid growth. New people coming in with new capital can be incredibly tempting for business owners to say yes to all with the revenue they can bring in and experience rapid growth. However the franchisor need to offer their franchisees support and resources, and if growth happens too quickly and resources are not available to offer support. Franchisors shouldn’t be afraid to say no to new opportunities. You should also consider that it is better to have 3 thriving stores than 6 mediocre stores!

Simplify Your Operations

Duplication and consistency is a key factor in franchising. As a franchisor you will no longer be hands on and involved in the daily operations of the business, rather you will instead be overseeing production as a whole. Having complex and difficult systems is not suitable for franchising, therefore you need to identify all your processes and tasks, clearly define them and simplify where necessary.

Top 4 Mistakes When Franchising

Make sure to avoid these mistakes if you are looking to franchise!
Underestimating Costs
Franchising Too Soon
Lack Of Planning
Setting Franchise Fees too low


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