15 Questions to Assess If You Are Ready to Become a Franchisor
There are many benefits to franchising your business. Franchising provides you with an opportunity to build a strong brand that has a lot of name recognition in the marketplace. It’s also worth noting that franchising can help you tap into the resources of others ─ from their expertise to their customer base ─ which can save you time and money while helping you grow your business faster than if you were doing so on your own.
When should you franchise your business?
The answer is, when it is ready to be franchised, and when you are ready to become a franchisor.
The article will provide you with key questions to help you assess when to franchise your business.
Making the Decision to Franchise Your Business
Is your business ready for rapid growth? The decision to franchise your business can be a fantastic way to help reduce some of the stress and make the process easier. However, before you decide to franchise your business, there are many questions you should ask. We’ve divided these into questions about your business and about you.
Is my business franchisable?
Let’s first examine your business.
Is my business performing consistently?
Can you show a consistent level of sales and revenues and a steady rate of growth across your existing units?
Does my business make a profit?
This is a question that often causes confusion. Many people consider ‘profit’ to be the same thing as ‘net income’. However, they are not. They can be quite different, and understanding the difference can help you make better decisions about your business.
Is my business model attractive to potential franchisees?
The word ‘attractive’ is a subjective term, so it’s important to define what you mean by the term. Do you want your business to be attractive because it has a great reputation? Or are you looking for franchisors who are going to make a lot of money?
A business model is a set of activities that are conducted to create and deliver products or services to customers. It includes the processes and the resources that are needed, as well as the financial, human, and physical assets that are required.
Can my business be replicated easily?
It’s important to have a successful business model that can be replicated in other locations. You’ll need to consider your target market, the knowledge and skills needed, and geographical factors ─ you wouldn’t sell too many ski holidays on a tropical beach!
Is my product or service credible?
If you’re selling a product or service and want to establish your credibility, you need to focus on the benefits. You can also use testimonials and case studies to back up your claims.
Is my business marketable?
There are many companies and businesses in the world, so why should your company stand out? Think about the following factors:
The customer needs your product or service
You can provide your customers with an excellent quality product or service
You offer a good customer experience
Customers enjoy a competitive price
You have a strong brand
Your business model is sustainable
Define what makes your business stand out from your competition. That’s what makes it marketable.
Does my business have a clear and identifiable brand?
It seems like a simple question, but the answer is not always straightforward. A brand is a set of associations that people make with an organization. These associations are based on the company’s actions and its products.
When you think of Coca-Cola, you think of happiness and refreshment. When you think of Apple, you think of innovation and sleek design. What is your branding? The most important thing to remember about branding is that it’s about what your company does for customers, not what it sells to them.
Is my business name/logo capable of trademark protection?
Trademarks are words, symbols, or designs that identify the source of goods and services. A trademark can be a word (e.g., Apple), a slogan (e.g., Just Do It), a logo (e.g., Nike Swoosh), or a combination of these items (e.g., Nike Swoosh with the text Just Do It).
A trademark is eligible for protection if it is distinctive and not generic, descriptive, geographic, or otherwise restricted from registration by statute.
Can I promise a return on investment to franchisees?
It’s important for you to be realistic about what you can offer in terms of ROI; while it may seem like an easy promise, it’s not always possible and may lead to disappointment in both parties if not managed properly.
Am I ready to become a franchisor?
If you are thinking of becoming a franchisor, you must understand that franchising is not for everyone. You need to be ready for the responsibility that comes with franchising. It is also important that you have enough savings and that you’re financially stable. You will also need a good track record of success in your industry or field of expertise.
Here’s what you need to ask yourself:
Am I ready to commit to the extra responsibility of being a franchisor?
Franchisors must work on the business as well as in it. In addition to managing their franchisee and making sure they are following the rules, the franchisor must make sure that all their employees are doing their job. They also have a responsibility for overseeing every aspect of how the business is conducted.
Do I have the capital (and time) to invest in franchising my business?
Franchising can provide you with the opportunity to grow your business more quickly, but it requires a large investment. You will need to work closely with a franchisee, which will require you to have more time available for this than if you were only running your business. You’ll need to set up and provide training and support to new franchisees. There are legal obligations, too, and these are not cheap.
Do I have the time/systems to support a team of franchisees?
Yes, you can have a team of franchisees. But you need to make sure that you have the time and systems in place to support them. If you don’t have the time or systems in place, then don’t franchise your business. It’s not worth the damage it will cause to your brand.
Have I considered other models of business expansion?
There are many different models of business expansion, and franchising is just one of them. Other models include licensing and joint ventures. Before you make your decision, you should explore all your options, remembering that franchising can be an excellent option for those who want to work in a less hands-on way and can focus more on the business.
Is there added value I can offer my franchisees?
There is no one-size-fits-all approach to franchising. Your commitment to maintaining relationships, sharing your experience, and helping your franchisees will be what sets you apart from the competition.
Have I got the right mindset to become a franchisor?
It is wise to look at your motivations and goals before starting your journey as a franchisor. You will need to be self-motivated and resilient because running a franchise can be tough. This will help you decide whether it is the right time for you to start.
Is now the time to franchise your business?
As a franchisor, you can grow your company by finding people who are passionate about your products or services and want to share them with others in their community. This means that you don’t have to do all the work yourself and, instead, you can delegate some of it to others who want to help grow your company with you.
However, while franchising is a terrific way to grow your business, it isn’t for everyone. It’s not a one-size-fits-all business model. You need to be in the right place at the right time with a proven and consistent product or service.
If you have answered yes to 12 or more of the above questions, it is time to start exploring the potential for your business to be franchised. But you’ll need impartial help to do so. As franchise consultants, we have the experience and contacts to make your franchising journey a success.
For more information, book your free consultation with New Ground Consulting now.