Expand your business by franchisingAre you planning an expansion strategy? Franchising can be a great way to upscale your business fast, but whether it’s the right strategy for you depends on the nature and state of your business and your own personal goals and commitment.
A good idea is not enoughSome people make the mistake of thinking they can make their millions by franchising a good idea. But the reality is, no one is going to pay you for just an idea – you need something tangible to sell. It could be a product or service, and it needs to be something that has proven market success and can be replicated easily and run by others.
Is your business franchisable?No matter how successful your business is, it won't work as a franchise unless it appears to be a good business opportunity. Pretend you are in the business of selling heat pumps. If you are thinking about franchising then you need to stop thinking about your product. You are no longer selling heat pumps, you are now selling a business opportunity, and that is quite a shift in mindset.
What makes a sellable business opportunity?First, your franchise needs to capture the imagination of potential business owners. It needs to appeal to them on both personal and business levels. The goal is to attract franchisees who are as passionate about your business as you are. Your business also needs to offer a good product or service with a solid business system, which is in a secure market position. And needless to say, it needs to offer good rewards – profits, turnover, growth potential and working conditions.
Is your business teachable?Knowledge is power and in the case of franchises, passing on knowledge is essential. A good franchise needs to be well documented and able to be taught. Like new employees, your franchisees will need to learn the ropes. This means taking time to ensure all your operating procedures, manuals, product information, etc. is all in order and easily accessible. You’ll also need to think about how much hand-holding you will be prepared to do. Do you need to prepare a training program? Or perhaps provide a mentor? In most cases, the more you invest in your franchisees, the more successful your franchise will be.
Select your franchisees carefullyAs your business begins to take on a life of its own, it’s important to make sure it is in hands you trust. Parts of your business will now be under someone else’s control and you will be relying on them to uphold the integrity of your brand. It is important to give them the freedom to exercise their own judgement, but you’ll also need to set clear parameters to protect the franchise.
The legal stuffWhen it comes time to franchise, you’ll need a franchise agreement, which forms the contract between you, the franchisor, and your franchisees, and a disclosure document, which includes full details about how the franchise will operate. These documents require a great deal of consideration and attention to detail as to what you will and won't provide, how it works, the obligations of both parties and the financial considerations. Check out our list of franchise specialists; including lawyers, accountants and consultants, who can provide assistance with the nitty gritty.
For more information about franchises, check out our resources for franchise buyers and sellers.
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