There are plenty of reasons why the franchise model is so popular, especially among American business owners. Franchisors benefit by being able to use other people’s money to quickly and effectively expand their business, and earn more money without the hassle of negotiating with investors, risking assets with lenders or juggling too many micro-managing hats. Initial franchise fees and ongoing royalties give the franchisor the capital necessary to build their brand and fund future endeavors.
Interested in joining the fray? If your independent business has been doing well and you’re eager to expand, then you should absolutely consider franchising out. Consider the following three signs your business is ready for franchising.
1. Your business has a strong history.
Arguably the best sign that your business is ready for franchising is that it currently runs itself. This means that you’ve worked out all of the issues and kinks of new businesses, such as temperamental supply chains and customer service hiccups, and your managers and other staff members have things under control, rarely calling you in for backup. Businesses ready to offer their modeling up for franchising have the financials proving they’ve been making money year in and year out and are a reliable, positive cash-flow business that franchisees would be eager to invest in.
Perhaps you’ve already had hungry investors coming to you with questions of how they can replicate your prosperity. If so, then you’ll know your business is ready to indulge them.
2. Your business can easily be replicated, cloned and scaled for national expansion.
A franchise needs to be able to work outside of your local town; it has to work throughout your state, region and country. This is one of the biggest missteps some business owners make when jumping too far, too fast.
Ask yourself, what it is that makes your business tick? Is there something about your location that propels its popularity? Or do you have a superstar sales manager or team of unique personalities that drives business?
Maybe you as the owner have an amazing network and are the special sauce that keeps people coming in. If your prosperity relies on something very specific to your location, staff or your own personality, then it’ll be hard for you to prove to others that they can enjoy the same results as you’ve had.
However, if there’s nothing that would restrict other business owners from taking your business product or service and replicating it elsewhere, then you are ready to becoming a franchisor. If you’re unsure, craft an outline of your business plan and speak with an expert on franchise modeling to learn if your business falls within this category.
3. Your business is desirable enough for hundreds (ideally thousands) of people to apply as franchisees and operate it within their own communities.
Finally, your business is ready for franchising if it’s been proven to be popular and that such popularity can be replicated, and it’s also appealing enough for others to invest their own money, time and energy.
Is your business booming in a marketable and growing industry? Or is it in a field that’s declining?
For instance, while you might have a booming niche video and DVD rental store, with the rise of Netflix and RedBox kiosks, this is a risky endeavor that few investors would be eager to venture into. However, if yours is a well-organized, systematized business in a ripe and growing industry, then it’s time to start filling out those franchise papers.
For more information, contact us at Accurate Franchising.