Should I Franchise My Business?Posted on: Sunday, 11 March 2018 4:56 pm
There’s a point in most businesses where you need to plan to grow. Traditional methods of company expansion have barriers such as lack of expertise, capital and manpower. However, franchising offers a route that can overcome these issues. Through franchising, many businesses find opportunities for growth that utilises the skills of dedicated franchisees and the vision of the franchisor.
- of the key aspects of franchising is the place of the motivated franchisee. Employees (no matter how good they are) are never as motivated as someone who has a financial interest in the business. And since the franchisee has both an investment in the franchise and a stake in the financial performance of the businesses, they will work much harder to ensure its success. And of course, the success of the franchisee becomes the success of the franchisor.
For companies with limited time and small management teams, franchising is often the fastest way to grow. That's because it's the franchisee that is driving the growth and is carrying out all the relevant business tasks. The franchisor provides the guidance and the support, but it’s the franchisee that puts in the legwork. Thus, franchising not only allows the franchisor financial leverage, but it allows him to leverage his franchisee resources as well.
Franchising is a relatively flexible format, and most type of business can be franchised. But to be successful you do need to meet a certain level of criteria. Ask yourself these questions:
- Is you company credible? Does your company have experienced management and a track record you can use to provide evidence to prospective franchisees?
- Is the business unique? Is your business adequately differentiated from its competitors? Does it have a sustainable competitive advantage? Is it bringing something new and better to the marketplace?
- Can you teach a franchisee to operate it? Could you train someone with limited knowledge and skills to operate a business like yours?
- Can it provide a good financial return? Is your business model profitable and is there enough both for you and a prospective franchisee?
If your business meets these criteria, then it may be a good candidate for franchising. You now have the basis to explore franchising as a method of expansion.
The next stageis to speak to a franchise expert. There are a huge number of issues that franchising needs to address and the only way to do this is by using a specialist franchise consultant. Companies such as The Franchise Company have helped hundreds of businesses franchise, which means a level of expertise that can be critical to the success of a franchise project. Any franchising plan must take into consideration the numerous issues covered by a new franchise project: franchise modelling, development of the franchise territory, fee structure, franchise forecast to name just a few. A franchise consultant will help you navigate these issues to a successful conclusion.
Once you’ve had your franchise model developed, you need to market and sell your franchise. That requires knowledge of how to attract prospective buyers and the necessary marketing materials that will help make the sale. Moreover, since the franchise sales process is highly in-depth, you'll need to be educated in proper franchise sales techniques. Recruiting a franchisee requires far more expertise than recruiting a new staff member.
Regardless of how you make money as a franchisor, you'll have two roles: selling franchises and servicing franchisees. And of the two, ensuring the success of your franchisees is the most important aspect of being a franchisor. A successful franchise network means a successful working partnership with you and your franchisees.
When properly structured, franchising can allow small companies to more effectively compete with much larger competitors. It can also allow larger companies to gain the advantages of highly motivated unit management while reducing overheads. As such, franchising is an option that more and more companies should explore. It’s a modelling process that can be applied to many styles and sizes of business with proven results.
The key to success in franchising is successful franchisees. Remember, without successful franchisees no franchise system will last. Businesses with successful franchises have no limits to their business success.