Is My Business Suitable For Franchising?
8 Important questions to ask yourself before franchising your business.
1. Is your business successful?
Success for a business does not only refer to profit and turnover, as well as positive financial results. It’s also about the processes, procedures, know-how and other elements that have helped you build a successful brand. Since much of franchising is about transferring the latter on to others, you need to ask yourself whether your business is successful in the true sense of the word in addition to financial success.
2. Is your business scalable?
Scalability refers to your ability to duplicate your business model across various units in different territories. Whether you’re thinking of franchising locally or internationally, the same questions will apply. These include whether you can replicate your business model so that your franchisees are profitable as well, in addition to providing your franchisees with the right training, support and even products to ensure their business is successful.
3. What is the state of the market?
The general state of the market will generally indicate whether it’s a good or bad time to start franchising your business, although it must be noted that franchises by their very nature usually have a recession proof business model. In this scenario, you need to ensure that your brand is strong and that you can not only continue to find new customers but also find new franchisees to help you grow your business as well.
4. Is your business easy to replicate?
As franchising by its very nature involves expansion across territories, different cities, and states etc., it’s crucial to determine whether your business’ success is due to its current geographic location. If this is the case, then franchising might not be for you. However, if it is not the case, then you can proceed to consider franchising as an option.
5. Is your business specialist (can only be run by professionally qualified people)?
The higher the number of factors, qualifications and experience required to run the business, the more specialist it will be and the harder it will be to replicate, although not impossible. Think about whether your business requires a specific skill set or levels of education, apart from the standard training that you’ll provide your franchisees. If it will not be too hard to onboard new recruits, then your business is ready to be franchised.
6. Is your business protectable?
One of your business’ biggest assets is its brand and reputation. While reputation is hard to measure, the brand contains certain elements that can be. For example, are your trade names and logos registered and protected with the relevant authorities? Do you own your website’s domain name? Is your name relatively generic, making it difficult to compete with others or is it something special and unique?
7. Does your business have sufficient revenue?
Your budget is probably one of the biggest considerations you’ll need to keep in mind when considering franchising. The budget will involve legal fees for creating your Franchise Disclosure Agreement, protecting, and maintaining your brand, growing your franchise network, as well as marketing and promoting your franchise business model to others. This is a long-term initiative, and you need to be financially prepared for it.
8. Do you understand the franchising business model?
The franchising business model differs from the typical businesses out there. It’s a very special model that is built on a successful platform, can be replicated across units in the country, and requires a long-term commitment rather than expectations of short-term success. Consistent execution and focus will be one of your biggest priorities as you onboard franchisees and train them to deliver one standard of services or a set of products to your customer base.
