Tuesday, January 12, 2016

Should I Franchise My Business?

If you aspire to grow your small business on a large scale, then you have probably considered franchising as a strategy. It's certainly one proven way to grow exponentially and realize your goal of owning a larger company with multiple locations.

Franchising can be a relatively fast approach to significant growth while leveraging other people's money and effort - namely, your franchisees. The franchisee gets a proven business model and support, while you get rapid expansion that would otherwise take much longer and much more capital to achieve. 

Do you have the right business model and are you ready to franchise? Those are perhaps the two most important questions on this topic. 

Do you have the right business model?

Not all businesses are ideal for franchising. The questions to ask yourself as you consider franchising include:
  • Can your business model be duplicated? Can a franchisee, following your training and documentation, offer the same products and services in a uniform fashion? Or is your business model too complex to support repeatability? Does the success of the business rely on one expert owner who has to deliver the product or service - like an artist or highly-skilled craftsman?
  • Can you scale the operations? Are there economies of scale as you expand to more units? Can franchisees successfully own more than one unit? Are the raw materials required readily and affordably available in different markets?

Are you ready to franchise?

Business owners often underestimate the effort required to start and operate a franchise system. It truly is a separate business, and it will require a dedicated team to start and operate a successful franchise. Some important questions on this consideration include:
  • Who will continue running the existing business, and who will lead and manage the franchise operations? It will be extremely difficult or impossible for you to lead both businesses.
  • Do you have proven systems in place and are they documented? Part of offering a franchise includes a thorough Operations Manual, and the necessary training and support to ensure the success of each franchisee. 
Franchising can certainly provide you with accelerated growth and financial success. But you have to make sure your business model is a fit, and that you are properly prepared before you sell your first franchise.

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