As a franchisor travelling around and chatting to other business owners, one of the questions I get asked the most is “How or when will I know if my business is ready to be franchised?”
And it’s one of those questions that is pretty impossible to answer – I firmly believe that the success of any franchise brand hugely depends on the personality and mindset of the business owner and would-be franchisor, as well as there being other factors that may dominate in certain industries or geographical locations that would affect the success of any franchise launch.
However, there are certain questions that any would-be franchisor should be asking themselves when considering whether or not they should proceed down the route of franchising their business. It’s not an exhaustive list by any means (and certainly not a guarantee of franchise success!)– but if the honest answer to the ten points below is a resounding YES then that’s a positive indication that investigating the viability of a franchise model as a route to expansion is a step worth taking…….
Do I have a clear and identifiable brand?
Launching a successful franchise is about much more than having a good business idea. It’s about having a brand, vision, message and USP that will stand out amongst the crowd – one that will translate well across a range of geographical locations and which can be clearly communicated to both prospective franchisors and customer
Does my business make a profit?
It goes without saying that no one will want to buy into a franchise opportunity if it isn’t going to be capable of making money. Some would-be franchisors can be tempted to view franchising as a way of injecting capital into a cash-poor business, however nothing could be further than the case – franchising is an expensive business! Some experts suggest that the business should have been steadily in profit for 3 years before considering taking the steps towards franchising – however that might not always be necessary or feasible if the brand is a unique and niche one looking to franchise before others jump onto the bandwagon! The same rule however still applies – the business must be turning a profit and capable of growth.
Is my product or service credible, with longevity and with broad appeal?
Anyone looking to invest in a franchise will be looking to the long term. The product or service must be one that will withstand the test of time and be capable of development and expansion to weather future market changes. Novelty acts need not apply! And it’s important that the offering isn’t just a local hit – it needs to be a business that will have appeal in other geographical locations too.
Is my business name/logo capable of trademark protection?
It’s essential for any brand looking to expand through franchising that they have a business name and/or logo that can obtain and maintain trademark protection. This extends of course to domain names and increasingly importantly social media tags.
Can my business easily be replicated?
For a business to be franchiseable it needs to be teachable. If the core business is only successful because of the location or because of the personality of the person running it, then it’s extremely difficult to be confident that other people would be able to replicate it’s success. An ideal franchise is based around something that other people can easily be trained to do – such as making coffee or burgers, running cleaning operations or providing delivery services.
Do I have the capital (and time) to invest in franchising?
Franchising a business is a costly business – both in terms of finance and time. A would be franchisor will need to do the sums and ensure that they have sufficient capital in place to employ the necessary experts to get the business franchise-ready (lawyers, franchise consultants, accountants, branding experts…..), as well as an amount of working capital to support the business in that difficult period before the first few franchise sales are achieved. Not only that, but franchising effectively involves getting everything that relates to the running of the business out of the entrepreneur’s head and down onto paper so that the franchisee operations manual, policies and procedures can be prepared. This is an incredibly time consuming task, and one which the franchisor-to-be is generally trying to carry out whilst still being heavily involved in the day to day running of the business.
Is there added value I can offer my franchisees?
For any emerging franchisor, one question to ask yourself is “Why would a franchisee join my business rather than set up by themselves?” . It’s essential to think carefully about your target franchisee and what would attract them to invest in your brand. What will make your brand and your franchise package stand out in the marketplace?
Do you have the time/systems in place to support a team of franchisees?
One common mistake that emerging franchisees make is failing to look beyond the actual launch of the franchise package and having insufficient appreciation of the level of support and assistance that new franchisees will need. Happy and profitable franchisees are any franchise brand’s biggest asset so it’s important to look to what your support and operating systems will be as the business grows – and ensuring that there is finance in place to support this.
Have you considered other models of expansion?
For some types of business, franchising is realistically the best way of expanding the business across multiple locations. However other alternatives should not be ignored – taking on staff, opening another unit or leasing another vehicle.
Have you got the right mindset to become a franchisor?
Last, but in my opinion perhaps THE most crucial question of all. A business can be franchise ready in all other respects but taking on the role of a franchisor is a huge step and not one that suits everyone. You need to be psychologically prepared to invite other people to become part of what is essentially your business “baby” – for me this was the hardest step – and to be able to allow your franchisees to take control of their own businesses (within the confines of the franchise agreement of course). You need to be resilient and able to withstand some hard knocks, willing to do a lot of hand-holding – especially in the early stages – and able to inspire your team of franchisees. Franchise success very often depends on the mindset and personality of the franchisor at the helm of the brand – franchisees expect leadership, fairness and honesty from a franchisor, so it’s important to take a hard look at your own self in the mirror before taking a step onto the franchising roller coaster!
Source: Forbes – https://www.forbes.com/