Many business owners dream of seeing their business grow and scale over time – not just for their own fulfilment, but in the hopes of eventually selling that business and turning in a worthwhile profit. To make that happen, you’ll often need a lot of capital investment to spur growth for your business – unless you choose to turn it into a franchise.
Franchising your small business essentially means you can expand your business using “other people’s money.” While that may be true, there are still other costs involved and a lot of work to put in before the payoff. To succeed as a franchise, you must…
- Think about whether your business concept suits a franchise model, and what would compel franchisees to buy your franchise over starting their own business.
- Get as much legal advice as possible before starting out, and even seek the advice of a franchise consultant if need be.
- Acknowledge that your role in the business may change, if only for a while.
- Pick your franchisees wisely, rather than saying yes to anyone with capital.
- Be there to provide the right support and training to your franchisees.
You may love being your own boss and running your own business, but turning that business into a franchise can be a very different experience. Make sure that you have evaluated whether franchising is right for you before you start taking your small business to the next level. Here is more on what needs to be done in order to franchise your business.
Consider your business concept and model.
Your first port of call is to consider your business concept/model and whether it’s viable to turn into a franchise. You may be offering the same old service as anyone else, but do you have a unique twist on it? If not, what would compel a franchisee to buy your franchise over starting their own business with the same services?
Examine whether you have a unique selling point (USP), an established brand name, or demonstrated success with organized plans or refined techniques. These are all elements that will encourage a franchisee to franchise your business over starting from scratch. You want your concept to appeal to both consumers and franchisees, and not be dependent on your own personalization to thrive. In other words, your concept needs to be replicated by everyone.
The fast-casual Mexican food franchise Mad Mex is an example of a franchise with a USP that takes advantage of the “healthy food trend” and offers consumers a non-greasy Mexican food option that was missing from the market. With an already successful menu and pre-considered portions, Mad Mex allows franchisees to open a food store without having to experiment with their own concept and menus.
Get as much advice as possible.
You may be a seasoned businessperson, but if this is your first time franchising, you’ll need to put up your hand and ask for help. This is the part of franchising your small business that does require some capital, but that’s an investment that will ensure you get the most out of your franchise.
It’s essential that you seek advice from someone who knows what they’re doing and can iron out issues before they scale and become big problems. That’s why it is always a good idea to first speak to a lawyer or franchise consultant and make sure you think carefully and plan for things like these:
- The franchise fees, royalty percentage and terms of the agreement
- Where you want to franchise your business
- The type (and length) of training you’ll provide to franchisees
- What kind of business experience or capital your franchisees will need
- Whether you want an owner-operator for each franchise
- How you’ll help with marketing activities
Whatever you do, don’t skip over this step because you’re too eager to get started. The decisions or numbers may seem small in the planning stage, but they will add up the more franchises you sell.
Prepare your small business for a change.
You must understand that your role in your business may change when you become a franchisor. Scratch that – it will change. You will no longer be responsible solely for running your business, but also for supporting franchisees and selling franchises. You’ll have to give up some of the control you previously had with your business and delegate your tasks to someone else.
Ask yourself whether you’re happy to relinquish some of that control and take a step back from your business operations for a while. If you’re so intertwined with your business concept that you can’t bear the thought of someone else taking over, then perhaps franchising isn’t right for you.
Pick your business franchisees wisely.
A big mistake many franchisors make is that they want to see their business grow as fast as possible, so they sell franchises to just about anyone. For your franchise to succeed, it’s vital that you choose the right franchisees. Often, you’ll find that the perfect franchisees are already working for your business.
When choosing a franchisee for your business, capital isn’t always as important as finding the right person who believes in your business model. You’ll be engaging with your franchisees for the entirety of your working relationship, and it’s vital that you choose self-motivated people who are …
- Passionate about the industry.
- Open to criticism and advice.
- Loyal to your brand concept.
- Motivated toward business expansion, thriving on business challenges.
- Willing to adjust their lifestyle to grow the business.
As your small business grows, keep an eye out for staff members who have goals and values that align with your business model and have shown loyalty in the past. These will be the best franchisees when it’s time to take your business to the next level.
Provide the right support to small businesses.
The work doesn’t stop once you’ve sold your franchise. If you want it to succeed, then you need to provide a lot of guidance, support and training to your franchisees. Even if you have chosen an employee to take on your franchise, don’t assume that they know everything and don’t need your help.
It’s in your best interest that your franchises thrive, so you have to be there while they set up their business and for the first few months of operation. Fitstop is an interesting example of a franchise that handpicks franchisees from its own employees. In this case, personal trainers offer training and support to help franchisees thrive in a business environment. In this way, business growth is “structured internally” through gym loyalists and brand ambassadors.
Making a franchise out of your small business is an extremely rewarding move, and if you’ve taken the time and care to complete the steps above, your small business could one day become a household name. What small business owner doesn’t dream of that? As with any business decisions, don’t rush into franchising your business. Make sure that your motives come from a good place, and the rest will happen naturally.
Source: business.com: https://www.business.com/