You have a business and want to expand. There are a variety of ways to expand the number of locations, company owned, bringing on partners, venture capital or franchising. Many businesses decide that franchising could be an extremely effective way to develop a brand and business model without the intensive capital or staffing needs of other channels. But how do you know your business is ready to franchise and how do you know when is the right time to franchise your business? Here are some items to think about if you’re seriously considering whether to franchise your business.
1. Is your business currently successful and how do you define that success? If you want to entice entrepreneurs to invest in your brand, it must have a track record of solid revenue growth, dependable profit margins, and a strong customer/client base. Your business may be ready to franchise if the business has credibility based on current success.
2. Why is your business successful? Can that success be achieved in other locations in volume? The success must be due to factors that can be replicated and easily taught to others. For example, if your successful concept is based on a service that’s in high demand and isn’t widely available, your business may be ready to franchise if prospective owners can learn how to run your business model. But if the reason your business is successful is due to being located in one hot market or to having unique skills that make you best suited for success, you may not be able to replicate that success.
3. Can you afford to franchise? You may be ready to franchise your business if you have the capital to put the necessary franchise infrastructure in place. You’ll need to hire attorneys to provide legal support and all the necessary documentation. You’ll need to set up training, operations, and marketing systems. You’ll need to cover the cost of state registration fees. You may hire franchise consultants. The cost to franchise can range from $15,000 to $100,00 depending on the business.
4. Can you sell your franchise business concept to entrepreneurs? How will you convince anyone to spend the money necessary to open a location for your brand? You’ll need to market your business to prospective owners and sell them on your concept. You may be ready to franchise if you can make the argument that between the franchise systems you’ve put into place and the prospect for customer/client demand and revenue, that your business will be a success for anyone willing to take a risk.
5. Are you ready to provide the systems to franchise owners for long-term success? If you’re ready to franchise your business, your franchise plan must include systems for training, operations, administration, and marketing. If your business requires equipment, you need to find ways to minimize those hard costs for owners. You may need to offer assistance with lease agreements or attaining the most desired locations. Your business needs to be turnkey for every franchise owner. You may be ready to franchise your business if you have a solid plan for franchise owner support.
For more information on when you should franchise your business, contact us for a free franchise consultation: https://www.fmsfranchise.com/contact_franchise_consultants/