Are you ready to take the leap into franchising?
Hopefully now you understand why franchising is such a great way to grow a business, and you know that your business can be franchised.
Now comes one of the most important decisions you’re likely to make as a business owner…do you have the right level of commitment to franchise your business?
Launching a franchise requires a great level of responsibility and, with the right leader, business setup and timing, franchising can springboard your business to national or even international success.
Have you carried out a comprehensive viability study?
The decision to franchise should not be taken before you have carried out a detailed viability study, or franchise development plan, to ensure that the following questions have been fully answered.
This can be likened to having a structural survey done before you buy a property, just to make sure there are no hidden surprises which could end up costing you a lot of money down the line. You could choose not to, but the cost of having it done will ensure you can make a confident decision to go through with the investment.
Most business owners won’t have the know-how or experience or time (or lack all 3 of these!) to undertake a detailed viability study themselves, and even if they did (have all 3), it can put an owner, who is wanting to franchise their business, in a compromising position where they may face challenging their own decision.
For these reasons, you should look to have this viability study carried out by an experienced franchise consultancy company which has specialists in your sector.
7 Questions to Ask Before You Spend Any Money
- Can franchising help achieve my short and long term goals?
- Do I believe my business model is easily duplicated?
- Does my business provide benefits and differentiation and rewards to attract potential franchisees?
- Can I provide leadership, training, systems, marketing expertise, territory and location help and all the other tools to help franchisees grow their own successful business following my system?
- Can I create a culture of collaboration with my franchisees, who, in this modern world of business, must be treated like ‘partners’ in your business?
- Are you happy with the legal responsibilities and your accountability as a franchisor?
- Can I invest the necessary amount of money, time and resources to properly develop a successful franchise system?
Who should you choose to work with?
It’s really important you make the right decision to set you off on the right track. Make sure you do your research and speak to recognized franchise specialists with a track record in franchise development to help you get the answers you need.
Speak to any of the following professional services with a good background in franchising (they must have real franchising experience), and ask them who they’d recommend:
- Franchise legal professionals
- Franchise accountants
- Franchise banks
- Financial services partners
Franchising and Swerving Failure
You may think we’re trying to put you off deciding to franchise your business!! We’re not, but we feel you should have all the information you need to make a fully informed decision.
We’ve seen too many really good businesses fail at franchising. It’s not that their original, independent business failed, but the opportunity to turn that successful business into a franchise did not work out and so they gave up trying to grow the business through franchising.
We love franchising! We live and breathe it! We believe the future success of many successful independent businesses lies in franchising and we’re always looking to ensure that the mistakes made by others, are not made by you…
Read carefully the information below, and if, by the end, you’re still as motivated to explore the world of franchising, then get in touch or continue your homework.
Key Considerations Before You Decide To Franchise Your Business…
Can you ensure your franchisees will be successful?
Nothing is guaranteed in the world of business, and it’s really important that you create a secure business model for your franchisees, before you go and find them! Their success, or failure, will be your success or failure…
When you put together your detailed financial models and business plans from the viewpoint of the franchisee, you must consider various scenarios, with a mix of low, average and optimistic revenue and expense projections.
Your future relies on the success of each franchisee that joins you. You must therefore offer an attractive business opportunity that’s also viable and profitable to both them and you.
Any shortcuts taken in these early stages of development can create cracks and weaknesses that become almost impossible to fix later on, and these kinds of mistakes can be catastrophic for the franchise business you’ve created, as well as the franchisees who have trusted, and invested their money with you, and possibly made great sacrifices, or taken big risks to do so.
Can your business model be easily duplicated?
Do you think your type of business will work almost anywhere and fit anyone? Then it’s time for a second opinion from specialists in your business sector to ensure that there’ll be enough interest in your concept to build a strong network of franchisees.
Franchising is a whole other business to your own
To grow your business through franchising, you’ll need to learn about recruiting franchisees, and then training, coaching, educating, motivating, leading and supporting them. You’ll need to hold meetings, and, eventually, conferences for franchisees. You’ll have to implement specific franchise technology and software systems.
You’ll need to understand about territory analysis, and may need to get involved in leasing and construction (for franchisees requiring premises). Product distribution; research and development; marketing initiatives both locally, regionally and nationally.
If you’re successful at finding franchisees, franchising becomes your main business. Your leadership abilities are fundamental to growing and sustaining a franchise company.
Your franchisees are business owners, not employees
They have the rights to independently own and run the business. The relationship must be treated as a working partnership because franchisees will speak out whenever they feel they need to. They offer ideas and support the brand, but will be quick to criticize if they feel let down. A great relationship with franchisees can lead to untold success, but a poor relationship will only cause frustration and problems.
You won't make much money out of franchising in Year 1
If you’ve been thinking that franchising is an easy way to create profit through selling franchises, then think again! The franchise license fees that are paid to you are largely re-invested back into your system from the start, allowing you to put in the infrastructure you need to ensure profitable growth.
Monetary rewards will come, and they may be beyond what you thought was possible, but a long-term plan needs to be looked at (3 – 5 years minimum) to decide whether franchising makes sense for you.
Your future relies on the success of each franchisee that joins you. You must therefore offer an attractive business opportunity that’s also viable, and profitable to both them and you.
Any shortcuts taken in these early stages of development can create cracks and weaknesses that become almost impossible to fix later on, and these kind of mistakes can be catastrophic for the franchise business you’ve created, as well as the franchisees who have trusted, and invested their money with you, and possibly made great sacrifices, or taken big risks to do so.
What are your goals and will franchising help?
If you want to grow your business without having to ‘hold the hands’ of your franchisees and without spending much time with them, then franchising is probably not right for you.
Are you looking to sell your business once it's franchised?
Many people make the mistake of franchising their business because they believe they’ll be able to attract some venture capitalists who see the value in the network they’re building, and the structures they’ve put in place.
This can certainly be a secondary, and long term goal, but the primary reason you should be franchising is to create a secure and sustainable network of franchisees, which has the potential for creating an excellent scenario for you, and with this, comes real net asset value…