5 Questions to Ask Before Franchising Your Business
A variety of occurrences can make you consider franchising your business. After all, franchising is a proven, successful, and popular model for rapidly expanding your business without building and staffing other locations yourself. But should you consider franchising? After all, franchising your business is not a light undertaking, and certainly not something you can carry out on your own.
First of all, why are you even considering franchising your business? Is your small business growing and turning a healthy profit? Do you regularly hear from out-of-town customers who ask when you’re going to open a location in their area? Are you yearning for the excitement of a new startup venture or growth opportunity?
If your answer to these questions is affirmative, maybe you’re ready to explore franchising your business. Before you dive into the process, or even contact a franchising advisor, here are five questions you should seriously consider.
Is My Current Business Financially Successful?
Some franchising experts advise business owners to have at least three locations up and running successfully before considering franchising. The idea behind that advice is that after starting and operating three locations, you will already have a good idea of what is required to begin launching franchise locations.
This may be a good suggestion, but it isn’t actually necessary. The experience would be valuable, and so would the deep revenue pool. Launching franchises is costly, although not as costly as opening your own branch locations. You will need to finance franchising necessities, like all the required legal documents and training for your franchisees. Of course, you will recoup much of this over time through franchising fees.
Even in partnership with a good franchising advisor, these costs can run into hundreds of thousands of dollars over time. If your existing business does not have this capital in reserve, you must at least be stable enough for acquire a business loanfor the amount needed.
Can My Current Business Operate When I’m Absent?
This can be a huge challenge for many small business owners, especially those self-starters who began as a sole-proprietorship and worked their way into a lucrative business. The type of personality necessary to accomplish that often finds it difficult to hand over operations to others. If you struggle to allow employees to perform important tasks in your current business, you may also find it difficult to allow someone else to run a copy of your business.
If you struggle to let go, it’s time to practice it with your current employees. Create an operations manual, teach them how to run the various operations of the company, and then allow them room to learn and make mistakes. They will; they need to in order to grow and learn. As they become more proficient, allow them more responsibility as you ease out of the forefront and into the background.
Can My Business Systems Be Standardized and Taught?
This is an important question, because when franchising your business, you are essentially creating a carbon copy that will operate in exactly the same way. So, everything in your business needs to be easily replicated and learned. Then, your franchises are able to provide a consistent product or service in every location.
A standardized operations manual and employee handbook are a must for franchising your business. If your current small business operates without them, you need to create them and follow them for a period of time until their use becomes commonplace. A good franchising advisorcan assist you with creating these, as well as standardizing your processes for easy replication.
Is There a Market for My Business in Other Locations?
A common mistake businesses make is assuming that their product or service will quickly catch on in any location. This can also be a very costly mistake. For example, bagel shops took years to gain popularity outside of New York. They have only recently become popular in the Midwest. It is a wise effort to research markets to discern if your product or service is wanted and/or needed.
- Is what I do or provide familiar in other areas of the country?
- Will it be necessary to educate consumers on my business concept?
- Is my target customer base found elsewhere in my state? In the country?
- Is there a good supply of potential franchisees in the areas I’m considering?
Can I Handle a Purely Managerial Role?
If the joy of hands-on work is what makes you want to get up every morning, then franchising may be a bit of a downer. While there are certainly challenges involved in franchising your business, they are more managerial in nature. A franchisor with multiple franchisees is more of a corporate head, who handles tasks like supervision, training, marketing, sales, giving advice and making major decisions.
Of course, some franchisors hire an overall franchising manager to handle that side of the business while they run the original company. This arrangement works well with the right people in place. If you are more of a hands-on type of leader, you may want to consider this arrangement.
Are you ready to explore franchising your business? Franchise Guardian advisors are standing by and ready to provide all the assistance you will need. Call or contact us online to schedule your franchising consultation today.