As you already know, if you are considering franchising your existing business, there is a great deal to think about before moving forward with your plans. What are five of the most important considerations?
Consistent Business Model
In order for a franchise to work there needs to be a consistently profitable business model. Your sole business might be running well, but to be a franchise there needs to be a profitable business model that produces long-term. You must be able to reassure franchisee’s there investment is worth it and you are giving them a lucrative opportunity to own a profitable franchise.
Business Model that Can be Duplicated
Having a successful business does not always equate to having a franchise. This is often the case, as a matter of fact. There are plenty of great businesses that are not suitable for franchising. There are also businesses that might be franchisable, but you need to consider what you contributed to your business’s success. Was it your personality or creativity that launched your success? Not all franchisees will have your personality, talents, or skills. You need a business model that can be duplicated.
You need a large enough market for your franchise. Are there enough people that are your ideal franchisees?
Do you have a successful team in place who can provide education and training to franchisees? One of the most important factors in a franchise’s success is providing franchisees with the tools they need to succeed. You must have a team that can provide guidance and support, as well as legal advice and public relations and marketing.
Do you have sufficient capital to fund the cost of becoming a franchisor? Remember, your role is going to change dramatically as you shift from owner and manager, to franchisor. Launching a franchise is expensive and the fees you receive when people purchase their franchises are not enough to cover these start-up costs upfront. You need to have a funding plan in place before you move forward.