Is your business thriving and you are thinking about franchising your business? This is the time to see when it’s better to franchise your business. When it comes to determining the franchise of your business, then your ability to commit this process can outweigh all.
Although franchising is a flexible option to consider for business, in reality, franchising isn’t the only mean of expansion for every business. Businesses that are ready to dip their toes in the waters of franchising needs to consider multiple factors before diving in.
Why franchise?
Are you running a growing business and thinking about franchising it? However, also wondering what benefits franchising can bring to your business? Here we have some compelling reasons for you to consider:
- Franchisees are responsible for their day to day operations that they have to do following your business operating manual. Therefore, you need a simplified franchised network to keep a check on performance indicators only.
- Franchisees will make an initial investment to become a part of your business. This will ultimately lower your costs of business expansion effectively.
- A franchised network is capable of expanding more quickly as compared to a company-run business network.
- Franchises are usually established as the local community’s part. This can give you a huge advantage in promoting your business at the local level.
Is my business ready to franchise?
Although franchising is a flexible format, and about any type of business can be franchised. However, when it comes to knowing when to franchise your business, then it must be able to meet some requirements.
Is it becoming difficult for you to recognize the franchise of your business? Here we are going to present predictive requirements that can let you assess the eagerness of your company for franchising. It will also let you whether you can accomplish success as a franchisor or not.
So, here are the most basic characteristics you need to consider in this regard. Assess the answers to the questions given below to see whether your business is ready to franchise or not.
Is your business credible?
To sell a franchise, your business must be credible enough in the eyes of your potential franchisees. However, the credibility of your business can be reflected in several ways such as years in operation, company size, prototype unit look, popularity, profitability, awareness of the brand among consumers, management strength, etc. Check out your business credit before making any decision.
Is your business scalable?
Before franchising your business, it is essential to determine whether your business scalable or not. To understand this, you can consider the following questions:
- Can you ensure the delivery of the same services or products successfully from franchisees that have made your company successful?
- Are you capable of developing effective support systems for your franchisees?
- Can you maintain consistency in customer services and levels of your product or service quality?
- Are you capable of supporting your franchisees by providing them necessary products?
- Can you offer day to day operations’ support to franchisees?
- Can your franchisees be profitable if these are going to duplicate your business model?
These are some essential questions to ask when it comes to determining the scalability of your business.
Is your business model profitable consistently?
Franchising is based on the success of your business. if you want to see whether your business is franchise ready or not, then it is essential to see its success level as well as must-have an effective track record of results in this regard.
Many of the businesses have appeal and image of being successful and financially profitable but do not consistently. As a business, you must ensure that your business model can provide lucrative profit opportunities to the franchisees. If your business model is not providing profit consistently, then thinking about franchising isn’t your option. It is because no one wants to invest money to lose.
Are you committed to building a franchise?
Many times, successful franchises are not the ones with the best ideas, products, or services, but the ones with better execution and the best commitment to building an effective franchise system
It clearly means your business franchise ability has to do a lot with your commitment and dedication to build a franchise system. So, think whether you are focused to build a franchise system that is going to grow over time or not before anything else.
Is your brand protectable?
As a business owner, your primary asset is your brand. Therefore, it needs to be secure and protected. To secure your brand, you need to control and own your trade name or business. For this, you need to register your trademark, control your brand name, protect your website name and URL, at its most basic level.
Is your brand name registered, or capable of getting registration in the future? Do you control the website of your business on your own? Is there any competitor who is using an identical brand name?
Is your business model reproducible?
If you are planning to franchise your business, you need to see the reproducibility of your business. More often, the unique qualities of a business founder, expertise, personality, charisma, sales skills, original business location, the clientele that has been developed over time can’t be duplicated repeatedly.
However, a business needs to have a system in place if it wants to start franchising which can be duplicated and implemented with individual franchisees with skillset and background different as compared to the founder of the business.
Is there a large market potential for franchisees?
When you are going to sell your franchises, as a franchisor you need to see a thriving target market for your potential franchisees. Maybe it is mid-level executives or ex-military looking for a new career. Hopefully, there will be many others with the desire to become your franchisees, but before making any decision research market properly.
Are you ready for knowledge transferability?
Considering the ability to teach your system to others is another criterion to check whether your business is ready to franchise or not. Your business must be able to educate your franchisee thoroughly in a short time period.
If your business is complex which can’t be transferred to a franchisee in a shorter time, then the business might have difficulty in franchising. However, some franchisors offset this problem by targeting franchisees that are already educated in a specific field.
Is your company containing sufficient capital to fund the cost to become a franchisor?
Launching your franchise is just like starting a new business. Ultimately, it requires some budget too. Therefore, before franchising your business, you need to understand your business goals, how quickly you want to achieve these goals, and what capital you have to get these business goals.
Keep in mind the fact that franchising your business isn’t a finish line, rather it’s a new start. So here are the budget-related questions you need to ask yourself.
- What is the cost required to launch a franchising system that is unique to the needs of your business and designed to achieve your growth goals in the best possible way?
- What is the cost to protect your brand and trademark?
- What is the cost required to register your FDD in the state you are targeting?
- What ongoing legal costs you have to pay to maintain your registrations and FDD?
- What costs are required for marketing and selling your franchise system?
How well your concepts are adaptable from one market to another?
This is another characteristic you need to understand here. Measure how effectively your concepts can be adapted from one market to another. It is necessary to measure because some of the concepts do not adapt properly over geographic areas, because of variations in preferences and tastes of consumers. While others can be constrained due to state law. Some concepts can work well because of individual talent behind the concept or unique abilities based on perseverance.
Do you have a refined prototype?
A successful and refined prototype is essential to validate your business system is proven. Furthermore, it is instrumental in the franchisee’s training. Additionally, a successful prototype can also act as a testing ground for new services, products, marketing techniques, operational efficiencies, and merchandising. So, before franchising your business it is critical to make sure you have a refined prototype operation.
Are you capable of building long-term relationships?
Successful franchisors need to focus more on building relationships with their franchisees. That is rewarding mutually. Unfortunately, not all business organizations understand the association between profits and relationships.
If you have the strength to build a long-term relationship with franchisees then it will work in your favor to sell your franchises more effectively. Even more, this can let you introduce the required changes to your system easily.
Final Thoughts
Franchising your business requires strategic planning, capital, experienced management, a consistently profitable business, and more. Before taking any step to becoming a franchisor, it is essential to check out each requirement properly. A deep analysis of these requirements will help you to know when to franchise your business to seek more success.
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