For ambitious business owners, franchising is often a smart way to continue to grow. That is, if you welcome franchisees onboard, you likely work with motivated business partners who have a success-based mindset. Of course, not all businesses are ready to franchise.
There really is no such thing as a quintessential franchise. On the contrary, business owners across different sectors find success by franchising their ventures. Still, before you do so, you should weigh whether your business is franchisable. Here are three simple questions to determine if your company is ready to take the leap into franchising:
- Do you have sufficient capital and other resources?
While franchising is often a cost-effective way to grow a business, it is not necessarily cheap. Instead, you must have sufficient financial resources and staff to cover training, development and support of franchisees as well as the cost and time of creating a form franchise disclosure document and related agreements. You also need some capital to generate leads to find strong franchisees. The object here is to come up with a franchise strategy that does not overextend your operational budget and the capacity of your personnel.
- Do you have a valuable product or service?
Before deciding to franchise, you must consider whether your business venture is working. That is, do you have a valuable product or service? Also, you must evaluate whether your concept appeals to a broader customer base. Finally, you should recognize that some businesses are more successful as standalone enterprises. Therefore, you must think about whether it is possible to reproduce your concept in multiple outlets and locations.
- Can you provide a meaningful return to franchisees?
You want your franchisees to work at least as hard as you do. To attract reliable owner-operators, you must provide a meaningful return as well as strong support, solid training and assistance with their business development. Your ability to provide value to both franchisees and new customers is likely to become increasingly important over time.
While this list of questions certainly is not exhaustive, it should give you some idea of whether your business is franchisable. Nonetheless, deciding to franchise requires analysis of all available information and a bit of soul-searching. With some effort, however, you can likely determine whether your enterprise is ready to join the franchising game.