So you’re considering growing your very successful business through the franchise business model – but you’re not sure if that’s for you.
Your greatest concerns are keeping your trusted and loved brand consistent, finding the right managers for franchises and the effort that has to go into getting other people as excited about building your dream as you are.
But before you start designing staff uniforms and picking out locations, you need to answer three vital questions that could change the course of your business forever.
1Is your business idea franchisable?
The answer lies in two fundamental factors – where you want to go and where you are now. The journey is what will determine whether running several stores would be ideal over starting a franchise chain, depending on the type of growth you’re after versus kind of business you currently have.
“If you plan to rapidly expand your concept nationwide, franchising is probably your best bet,” says Robert Barbato, director of the Small Business Institute at the Rochester Institute of Technology in Rochester, New York. Because the franchisee provides the capital for expansion, a business can grow much larger and faster than if it were funded by bank loans or internally generated funds, he says.
“You could probably sell a few hundred franchises in several years, but you probably couldn’t open a few hundred company-owned offices that fast.”
2Where to start if it is
Franchising your business guarantees rapid growth, but becoming a franchisor doesn’t always lead to success. This is especially true in the current economic climate.
Follow these steps when you finally decide your business model is teachable and can be replicated successfully:
- Take the time to compile guidelines to how exactly your business works. No detail I too small, especially for someone who hasn’t spent the time you have building your business to the success it is today.
- Protect your brand’s culture and make sure your approval is needed for anything that involves brand assets and your business’ public image.
Consult a lawyer to assist with the transition from a legal perspective. It’s more about setup costs and branding.
“You’ll need to set pricing, create a franchise agreement and determine intellectual property protection,” says Tom Cannon, the CEO and cofounder of BungoBox.
3Getting the right people on board
You’ve got everything but your team ready. Your business model may be the next big chain store, but you will need passionate franchisees running a store of equally passionate staff to get your franchise off the ground and keep it fruitful. But, you may not be able to do all this yourself, so take a leaf out of musician, venture capitalist, businessman, and philanthropist Bono’s book.
His company Solar Universe, hired a trainer and a full-time ‘franchise advocate’ to answer franchisee questions and resolve any problems with the solar panels they bought from the company to sell.
When it comes to choosing your franchisees, ensure you’re not just looking for the highest bidder. According to the Young Entrepreneur Council, the following should be considered:
- Do they have the right background in order to run your business?
- How they represent themselves will be how your business will be represented
- You’re going to have to spend time nurturing and supporting you franchisees by constantly communicating in person and over the phone or internet.
Starting a franchise from your existing business may seem like a sure fire growth strategy, but only if you carefully craft a plan to maintain brand consistency, find the right managers and ensure that they hire staff as passionate about your business as you are.
This is your business and if you’re going to grow it, you have to make sure you’re ready to do a lot of research, put in a lot of time into who you pick to help you grow it and put a lot of thought into how franchising it will contribute to your end goal.