All of the sudden, the vision of your business being successful becomes a reality; you’ve got great customer service, solid employees, and even better sales. What’s next? Has an expansion for your business crossed your mind to keep up with the booming success? There are many questions to think about and analyze when considering an expansion. If you’re interested in future growth, now would be a good time to consider franchising. Although this is a big financial decision, it has great potential in helping your business. Franchising does require more effort and risk than what most small companies are used to. To help you gage whether or not franchising is right for your business, we’ve provided five questions that you should consider before making your decision.
1. How Strong is Your Brand or Concept?
Businesses can begin to see success for various reasons. That being said, branding should not receive all the credit for your business’ success. For instance, maybe you have exceptional salespeople. Maybe your business just hit the sweet spot by filling a local niche. You will not be able to rely on just franchises having these sorts of advantages. Your company needs to be strong in a variety of different ways (environments, markets, etc.) In order for your business to be successful in franchising, you will need to create a strong brand that is likely to succeed when up against other competitors.
2. Is Your business Easily Replicable?
The best type of franchises are replicable. It’s important that your business has a strong hook and an expressive brand. However, franchising still might not be in your best interest when seeking growth. As a business owner, it’s important to keep in mind that your other franchises may not be as experienced as your original business is. It will take time for a new franchise to understand and implement what your business is doing. However, your franchise will need to start producing revenue as quickly as they can when they first open. With all that’s been said thus far, the most franchisable companies are those that begin seeing success within the first few months.
3. Do You Have Enough Capital?
When it comes to franchising and expansion, it’s no surprise that they come with major costs. However, franchising may be a more affordable strategy rather that choosing a national expansion. In order to be prepared for expansion, you’ll need to make sure that you have a strong management team to lead your expanded business. Your management team should focus on marketing, development, and legal issues that they might face. You will need to calculate the funds needed to meet those extra costs and pay the added salaries while your business continues to grow. If you do not come prepared to do these things, you take the risk of seeing your profits plateau or drop before the fruits of franchisement even begin.
4. Is Your Franchisement an Attractive Investment?
It’s important to ask yourself, “why would investors want to be a part of this business? What makes our business appealing?” It is your job to convince them that this a good investment. This includes the presentation of a business strategy that is guaranteed to lead to profit. If you find that your business isn’t ahead of it’s competition in your area or industry, you become less likely to see the kind of growth you are hoping for.
5. Are You Willing and Ready to Change How You Operate?
When you choose to expand your business, you’ll find that that franchisements are fundamentally different. Many business owners have mentioned that their relationship with their business has changed as they took that step. Before franchisement, you will have the time to be more “hands-on” and be in the small details of your business. When you expand however, you’re likely going to be spending your time managing your brand and other franchisements. You will need to learn how to delegate responsibilities to those you trust. You will be able to work at a more strategic level to promote the growth that you desire for your business.
If you have gone through these five questions and feel confident in your decision of franchising your business, congratulations! It is an exciting step to take as a business owner. You will learn and grow in ways you would not have otherwise been able to. Franchising can be one of the best ways to expand your business at a fast pace. It’s time to pump up your profitability! The next question is “How? How can I franchise my business?” There’s no need to worry! We’ve laid out another six tips to help you get started:
1. Get Organized
Take some time to create a vision for your business and where you want it to go with a franchisement. Create some goals and how you want to accomplish them. This will help you feel the thrill of your business’ actual potential. To get franchises up and running, they will need exact details. In order to do this, think through the processes that your business undergoes to see success. This can be labeled as “dirty work” and can take quite some time, but you will thank yourself as you sidestep future mistakes and roadblocks. Some of these business processes should include marketing, inventory orders and details, staff training, business cards, etc. You want all of these to be executed in a similar way to your original business. When you’ve organized the processes of your business, create a operations manual to give your franchises a way to reference company policies.
2. Hire an Attorney
This is a crucial step within the franchising process. One of the first things you need to do is fill out a Franchisement Disclosure Document. This document will give you a direct format that you will need to follow. It’s important that you run through it with a lawyer rather than on your own. During this process with an attorney, you will create a franchisement agreement, set pricing, and distinguish intellectual property protection.
3. Build and Protect Your Brand
As you take on the new role as a franchisor, you will discover that your most valuable asset is your brand. Take extreme measures to protect it at all costs. Your brand represents your vision, beliefs, and attitude towards your customers. When your business becomes a franchisement, you are allowing new people to represent your company and its values. This can be an intimidating step as a business owner. In order to ensure that your franchises meet company policy, establish clear guidelines and effective staff training. You want to make sure that the message you are sending from one source is as clear as the original source. This will ensure that your organization is consistent. Don’t overlook small details, they are also very important.
4. Choose the Right Locations
This a very crucial aspect that you need to take a close look at. Simply where you place your franchisement can be a big indicator for success. Which locations make the most sense for your business? Where will people already recognize your brand? It may be a good consideration to keep your first few locations close to home base, but also far enough that they aren’t sharing the same customers. This will allow you some proximity so that you can visit your different locations on a regular basis.
5. Find a Mentor … Or Two or Ten
Talking to someone who has had experience is one of the greatest things you can do to prepare your business to become a franchisement. Seek out those around you who have franchised their business and how they went about doing it. Ask them about their successes, the struggles they faced, and how they overcame them. Typically speaking, people are more than willing to give helpful advice that they’ve learned through experience.
6. Support Your Franchises
At first, the beginning process for your franchisements may be a little rocky as new employees learn the policies and training. We highly recommend that you spend as much time with your franchisements as possible, whether that’s in person or by phone. Through these times, do all you can to encourage and reassure your employees. This will install the confidence and trust they need in you. Help them catch the vision that you have for your franchises. Celebrate the small victories and don’t sweat the small bumps. It may be helpful to set up a way for your franchisements to communicate with one another as well.
There is a lot that goes into franchising your business, but these are tips that we’ve found that helped businesses flourish. If you feel that a franchisement is in your best interest, be patient with the process. Just like your business, a franchisement doesn’t just happen overnight. As you implement these tips within your process, you will be better equipped and knowledgeable about what it takes to franchise your business. It may be hard at times, but it will be worth it when you witness the growth and profit that your business will begin seeing.