When we meet with any business owner who is thinking about franchising their business the first thing we do with them (well, after we put the kettle on) is to work through our top 10 things for consideration …
1. Why am I doing this? – ensure your motivation is business growth and not fixing a “sick” business. Be honest with yourself. Do you truly want to grow your business and are you prepared for the good the bad and the ugly that comes with it!
2. How long do I want to be in my business? – if you want out within the next couple of years franchising may not be the right way to go as it takes time to build your franchise network.
3. Is my business proven, profitable and sustainable? – Franchisees are looking to reduce the risk of start up. They are looking for a business that has learnt from its mistakes and is making money year on year. Franchisees are in it to make money and no-one wants to invest in a failing business.
4. Is there enough money in your business for you and your franchisees? –You make money from your franchisee paying you a monthly management/royalty payment. While you will also make money from franchise fees the model must be sustainable after all the territories have been sold and should not rely on franchisee fee income. There must be sufficient margin in your business for your franchisees to make a good income after he has paid you.
5. Investment in time and money – Franchising your business does mean a commitment in both time and capital. Even if you work with a franchise consultant who can remove a significant amount of the time burden you must still be sure that you have a clear understanding of what will be involved and have the capacity and resources available.
6. What is my hook –After the honeymoon period is over i.e. your franchisee has been trained, launched their business and is trading successfully will they still see the value in the monthly payment they are making to you? Consider what support and franchise package you could offer – would you buy it?
7. Can my business be taught – The most successful franchises are ones that have an excellent training and support program underpinned by clearly documented processes.
8. Is there a market nationally/internationally for my product/services? – Successful franchises are able to sell their products/services irrespective of geographies.
9. Do I want to change my business /role and do I enjoy helping people– Franchisees are buying your expertise and help. It can be very rewarding but you need to enjoy helping people or have the funds available to bring in the skills to make it happen.
10. Is my business in good shape – You may have heard sellers say that their house has never looked better than on the day they put it on the market. Franchising your business is similar. Before you ask people to invest in your business and replicate your systems it is essential that it is in the best possible shape.
In summary Franchising your business doesn’t have to be a minefield and there is opportunity for the goldmine – but do it right or don’t do it at all.