“Can I franchise my business?’ is an important question that many business owners ask themselves when they experience success with their current enterprise. Franchising your business can be an excellent way of expanding your operations and building onto your existing success as you seek new locations across the country to develop and grow. Wondering why you should franchise your business or what the requirements for this are? Take a look below.
Table of contents:
Why should I franchise my business?
Growth and expansion
There are numerous benefits to franchising your business, one of the first being growth and expansion. The very nature of a franchising business model is one that requires expansion into different territories and locations, which are followed by growth, depending on the profitability of the enterprise.
Aligns with your personal goals
If you’re in it for the long haul, then franchising might be the answer you are looking for. This is because franchising requires a lot of commitment, perseverance and long-term thinking to get set up and off the ground.
Aligns with your business goals
Franchising should also align with your business goals. Consider whether you’re ready for bigger growth, whether you’re ready to train newcomers in your way of doing business and whether you can replicate your existing business successes.
You’ve evaluated your strengths and weaknesses
Franchising also requires an in-depth evaluation of your strengths and weaknesses. This will entail industry analysis of your competitors, the “stickiness” factor that makes your business successful as well as what makes your business unique and how this can add value to your customers.
Potential profits to be made
Another reason why you might consider franchising your business is the potential profits that are yet to be made. With the successful expansion and implementation of your business model across various regions in your country, you can enjoy stronger revenue streams.
Industry trends and competition
Market research can help you determine industry trends and competition. If you’ve hit the sweet spot and already have a successful business with little competition, you’re in luck. Another important reason why you might consider franchising your business is the fact that the industry you’re operating in allows for it due to the fact that there’s a market gap that you’re capable of filling.
What comes after the fact?
Finally, you’re convinced that franchising is right for you but are you prepared for what comes after the fact? Firstly, your entire business model will change and this will require legal experts to help you out. Then, there’s also the aspect that you’re ready to get into long-term relationships with your franchisees. You will need to be prepared to train them and if you have the stamina for this and a long-term outlook, then franchising is for you.
Requirements to start a franchise
A proven model
As a franchisor, you will need to have all your ducks in a row, especially when it comes to your business model. You will need to show a proven business track record, which is characterised by its profitability, success and growth. Other factors to consider when you start a franchise are the business’ size, location, services and pricing. If these considerations are thoughtfully planned out and there’s proof that you can be successful as a franchisor, then you’re ready to develop your business as a franchise.
Scalability of your business
Speaking of location, your current business is probably currently located at one, two or three locations. But franchising requires much wider expansion than this as you seek to conquer new territories. Therefore, consider this: is your business scalable? How much can it grow over a certain period of time? Where do you foresee this growth taking place? And what are the anticipated returns on your investment?
Protection of your brand
Another important requirement for franchising your business is the protection of your brand. At the very least, you will have ensured that your brand’s logo, trademark, colours and images are all protected as trademarks or copyright patents. Since your future potential franchisees will be working under the umbrella of the brand, it’s crucial that there’s no watering-down of your brand identity and that it stays strong and protected no matter where in the country your franchisees operate from.
Marketability
Your business will be ready to be a franchise if it’s marketable, too. Marketability means that you’re able to advertise it to your current and potential clients in a consistent and effective manner. Marketing a franchise business will require two sets of actions: first, marketing to your customers and secondly, marketing to potential franchisees. Ultimately, your message in both cases needs to be clear and appealing so that you draw in both types of audiences to help your business grow.
Commitment
Your current commitment to your business is one thing, but the commitment required to franchise is another. In most cases, franchising entails a relationship between you as the franchisor and your franchisee of between five to 10 years on average. This means you’re in it for the long haul and endurance will be required. Are you ready and prepared for this? It will require significant relationship building with essential features such as trust, communication, processes and problem resolution.
The right budget
Franchising your business means you also need to invest in this expansion move. You will need to be able to establish appropriate systems, technology and support structures to get the franchise off the ground. This is not something that comes for free and you should also be prepared for the costs of systematising and scaling your operations.
Proprietary and tech know-how
Your proven business model, your business’ profitability, its scalability, your brand identity, the ability to market your business – all of these factors are your business’ proprietary and technological know-how. You as the franchisor will need to ensure you have all the processes in place, spelt out clearly and unambiguously for your potential franchisee. You also need to make sure you protect yourself and your brand and business from any legal ramifications.
How much does it cost to franchise your business?
If you’ve read the above and you think you’re ready to franchise your business, you’ll also need to consider the relevant costs of your business expansion. Factors to consider here are the legalities of changing your business model, protecting your brand identity, costs related to marketing, costs related to recruiting franchisees, creating systems that build upon your existing know-how and experience, costs of expansion into different territories and more. In other words, if you’re wondering how much does it cost to franchise your business, there’s no single answer to this question as there are several variables at play here.
Closing remarks
If you’re already a successful business owner, you like what you do and you’re ready to commit to scaling your business across a specific location and territory, then franchising your business might just be the right call for you to make.
There are many reasons why franchising could be good for you and your business. From profitability and growth to business expansion, from aligning with your personal and business goals to being committed to the long-haul nature of the business. Franchising is an excellent way of growing and expanding your current operations.
With this in mind, there are some requirements you need to meet in order to take your business to the next level as a franchisor. These could include the profitability and proven nature of your business model, your ability and willingness to train and develop franchisees, the right budget for this initiative and the fact that you have protected your brand and can market it effectively, among others.
