There’s always a price to pay when you decide to expand your business. Taking that next step can be fraught with logistical challenges and a whole range of different considerations. You will probably need to employ additional staff and that can take time, money and energy. Then there’s finding new premises and all the equipment and office space you need.
That’s just the start. You might need to rely on the bank to give you a sizeable loan. And what if it goes wrong? How will that impact on your business?
One increasingly popular way to grow a business is to take the franchise route.
What is Franchising?
It’s essentially a way of expanding your business by licensing out your brand and products or services to a third party. You provide the operating services and other key elements of the business and the franchisee takes on the role of leading the new business, including by investing their own money into the venture.
This is the kind of arrangement that appeals to budding entrepreneurs who want to run their own business but don’t want to build it from the ground up. A lot of major stores operate through this method. If you’ve recently had a Domino’s Pizza, the chances are you are buying from a franchisee.
For the franchisor, the benefits are obvious. They get to grow their business without having to lay out the large amount of capital that comes from buying new premises or employing extra staff. They take a cut of the profits of the new business, expand their brand and in return provide certain services and training that, hopefully, should ensure success for the franchisee if they’re prepared to put the work in.
Is My Business Right for Franchising?
A wide range of different businesses operate franchise models nowadays and it’s often not the sector or industry you are in or the product or service that you provide which defines whether this is the right route or not. It’s other factors, including:
- Is it the right time? The truth is that the biggest mistake franchisors make is entering into it before they are actually ready. Your brand needs to be settled, your processes in order and your vision and goals for the future set. You also need to be successful – if you are expecting to take your share of the profits from the franchisee, then you need to ensure that they are able to make a good living as well.
- Systemising the Operation: You need also to be able to put your operation into a formal system that any decent business orientated or entrepreneurial person can implement and stay on track with. If training up your franchisee is going to take a lot of money and time, you may not yet be at the point where you are going to find a lot of takers for your franchise deal.
If your business is right for franchising and you want to proceed there is a lot of work to do. It’s not just a case of handing your brand over to another person and hoping for the best. You need to put in place a support network and ensure crucial aspects like your brand integrity and how you are going to roll things out. You also have to attract the right kind of franchisee and they are not always the ones that are willing to pay your asking price.
It’s a good idea to get advice from a franchising expert before you embark on this route. Yes, it can be highly profitable and give you the opportunity to expand without the usual heavy financial outlay. But there are pitfalls that you will need to avoid. Talking through your business and how it can be franchised with an expert makes perfect sense. Contact us today to find out more.