Is your business ready to be franchised?

Is Your Business Ready?

How can you tell if you’re ready to step into the world of franchising? First of all, you must realise that you may not be ready. It’s important not to interpret this as a failing or setback; rather, you must allow common sense to prevail. You may feel ready to franchise your business, but if you take this step prematurely, you’ll find yourself struggling in the long run. If you find you’re not ready to franchise, don’t worry. Step back, keep working, and look at your situation again in a week, a month, a year.

Questions to Consider

Before you even think about franchising your business, there are certain questions you must consider.

1. Is my business successful, recognisable, and thriving?

Part of the benefit of franchising is the ability to reproduce a recognisable brand name or product. If your product is not yet internationally known, don’t sweat it -- as long as you’re thriving in your current area. Franchising will never revive a failing business. In fact, the increased cost and workload are likely to finish you. Your resources are best focused on turning your local business into a success before you direct your energies outwards.

2. Will my business catch on in other locations?

If you’re the only store in town selling umbrellas, you may want to step back and assess the reasons for your success before you consider franchising. Do you fill a niche market, or are you successful because your product is in some way extraordinary -- in quality, in price, or in concept? If you opened another store in another location, do you honestly believe it would do well, or are you relying heavily on local traffic and word-of-mouth? You may have a thriving business, but that doesn’t necessarily mean you should franchise. You must have a product that is universal -- something that will be a success regardless of location.

3. Have I attempted to open secondary locations on my own?

Before you try franchising, it’s highly advisable to try operating your own version of a franchise. In other words, launch a second business somewhere nearby, something you can supervise closely. This will allow you to reproduce your business model, which is the key to a successful franchise, as well as observe your product’s reception in another location. What’s more, it allows you to refine your business model before releasing it to the world at large -- which is essential, because once you’ve created a franchise; you’ve turned your idea loose on the world. You may have nominal control, but major changes may create dissent among franchisees.

4. Will I be able to attract franchisees?

Can you demonstrate your business model and show why your business will make a successful franchise? Remember, you have to attract franchisees the same way you attract customers. You want the best people in charge of your franchises: smart, responsible, reliable individuals. In order to attract them, you’re going to have to produce a franchise information packet that is clear and definitive. Double-talk will not work. Remember, franchisees have dozens of opportunities to choose from; you must make yours appealing.

5. Do I have the resources to expand my business?

Depending on the nature of your business, franchising may require a great deal of additional products, personnel, and commitment from you and your staff. There’s no sense creating a franchise if you lack the capacity to adequately supply and maintain it. You’ll only create ill will and demolish your future franchising opportunities. Before undertaking a franchise, be sure you’re prepared on your end.

6. Do I have available capital?

Beginning a franchise can be a costly endeavour. You must be sure you have a significant amount of capital ready to invest. As the saying goes, you have to spend money to make it!

7. Am I comfortable directing others, providing support, and marketing my product?

Obviously, if you’re considering franchising, you’re running a successful business. Franchising, however, is a far different arena than managing one or even two local businesses. You will have to entrust your product to people you don’t know well, and you must be prepared to provide adequate marketing and support. Franchisees will rely on you for training and direction. If you’re uncomfortable providing it, then you either need to find someone in your company who is willing to manage your franchises or consider other expansion opportunities.

Part of the appeal of a franchise is that the franchisee doesn’t require business knowledge or expertise. They will expect you to provide a great deal of support and training, especially in the early stages of the franchise. Of course, in the long run you hope to stand back and watch your franchises manage themselves, but you must be prepared for extra time and work at the beginning.