Franchising could open up a whole new world of opportunity for your business. But it’s not right for every company. Does your business have what it takes? Find out by considering these five key factors:
A track record of success
Franchising is about replicating a financial model that has already been achieved. If your company has been trading for at least two years, that’s a good start. You should have gotten through the tricky start-up phase and established a proven system by then. Good franchising requires the franchisor to have been through the learning curve, identified the pitfalls and found solutions. You can then demonstrate to potential franchisees that your business model works and is a worthy investment.
A strong brand
Strong branding is fundamental. People want to invest in a business that portrays a strong corporate identity and is suitable for national or international recognition. If your trading name has been formulated around a location, region or even your name, it is unsuitable for franchise expansion. Think about rebranding before you consider franchising any further. The brand should be simple and shout out the message of clarity, professionalism and quality.
Your product or service must be sufficiently different from your competitors to be attractive. This doesn’t mean it has to be totally unique, but it needs a clear point of difference to convince others to buy into it. It also needs to have staying power. Franchisees won’t want to invest in a business with a fashion-led product or service that may become obsolete over time. It’s more about long-term trends than quick wins. Your business needs to be sustainable and transferable to become a successful franchise.
A replicable, teachable concept
You must be able to teach someone else your basic business process within a reasonable period of time. If your model requires special skills, then the field of potential franchisees may be reduced. Bear in mind, though, that many franchisees are business people with suitable skills to run a business. They then employ staff who already have any necessary technical skills.
Think about your existing systems and processes. Are they comprehensive and user-friendly? Can they be operated readily without training? It’s worth investing time to ensure your business model is as professional and efficient as possible before you try to sell it to others. Franchisees will be attracted by a professional business opportunity which is ready to hit the ground running.
A sufficient profit margin
Franchising is not suited to low margin businesses. There must be enough operating profit to sustain business growth and development while enabling both the franchisor and the franchisee to enjoy a reasonable return. The franchisor must receive a sufficient profit margin to provide good backup and support and continue developing the franchise offering. The franchisee must have enough margin to build a rewarding business, given their commitment and dedication, and recover their investment over the life of the agreement. It must be a win-win situation that allows the franchisee and franchisor to succeed together.
The right management commitment to support others to succeed
Your attitude and commitment to franchising are key to its success. Franchisees are not employees but self-employed business owners who must be treated as equals. As a franchisor, you should lead with authority. But you can’t dictate. Franchisees should be allowed to have their ideas and suggestions heard and discussed. Your objective is to build a successful business with your franchisees, not as a result of them. Franchising is a long-term business approach where both the franchisor and the franchisee must gain for it to succeed.
Franchisors must be committed to supporting others to succeed with their business model. You must be ready to let go of the reins and let other people succeed with your business model. Good communication skills and the ability to encourage and support others are vital.
If you think your business ticks all these boxes, congratulations, you’re ready to franchise! If not, franchising could still be a future option for your business. Think about the areas you need to address first. Don’t be afraid to ask for help in getting your business franchise-ready. It could be the best decision you have ever made.