Published on 04/10/2019 by Any Business.Com.Au

​How do I know if I should franchise my business?

For many business owners, franchising can appear to be an ideal form of business expansion.

After all, franchisees are responsible for the entire investment in opening locations and, because of that investment, are highly-motivated to perform well. That allows franchisors to grow far faster than they might otherwise.

If you're considering franchising, there are a few questions that need contemplation on the way to discovering if your business has what it takes.

Is your business currently working?

In order to franchise a business, the business model must first be proven. There's no law, of course, requiring that a franchisor demonstrate competence, but there's a certain number of practical considerations.

In order to establish credibility to sell franchises, you'll need to show you've got an already successful strategy, matched with a supporting business plan.

Would I buy it?

In order to be franchisable, the business model also needs to be attractive to potential franchisees.

While it is difficult to quantify "saleability," factors such as credibility, uniqueness, and brand recognition all contribute.

Is the success of the current business easily replicated?

The key to success in franchising is making sure that your franchisees can easily replicate the concept, standards and success of the original.

If the concept only works because of a unique location, a superstar salesperson, or because an owner is working 80-hour weeks, it is going to be difficult to repeat the magic.

Ideally, a franchise concept should be relatively simple to operate and should be able to work in a variety of markets.

Of course, potential franchisees can certainly bring some special skills or qualifications to the game – but that shouldn't necessarily be counted on.

Will the potential franchisee be able to make a living?

A franchisee who is an owner-operator will expect to get a return, both for the time that they spend in the business as well as their investment in the franchise.

You must run the numbers to ensure the franchisee will be able to survive in both the short and long term.

Can you provide value?

The franchise business is largely about maintaining relationships. The most successful franchisors are typically those that are the most committed to making sure that their franchisees are successful.

This is where the importance of quality training programs, high impact marketing campaigns and consistent on-going support come into play.

Do you have the capital?

While franchising is a low-cost means of expansion, it is not a "no cost" strategy. A new franchisor will need capital to develop legal documents, manuals, training programs and marketing materials, not to mention a marketing budget for franchise lead generation.

AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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