Franchising is a great opportunity to expand a business and compete in a larger marketplace. Many business owners regard it as the next big step, but only a few know that not all businesses should be franchised. It is true that franchising is highly beneficial when done right, but it is also a huge responsibility packaged with its own set of risks. To know whether your business is ready to franchise, several factors must be considered. Listed below are five of them.
- Are you ready?
Getting yourself and your business ready are two different things. What we aim to confirm is the latter, but to move forward, we also need to verify that you, as a business owner, are ready. Remember that franchising is a constant learning process that involves wise decision-making.
- Is your concept or business unique?
Assuming that you are ready, the first thing you have to think about is your concept. If similar businesses are already existing in the market, you should assess whether your business offers a distinct characteristic that sets it apart from its sibling concepts.
- Can your business be sold and replicated?
Having a distinguishable business plays a vital role in franchising, but there is a fine line between unique and sellable. This is where your business should reside. Being distinct should not work against you, albeit it should attract potential franchisees.
In terms of replication, ask yourself why your business works. Is it because of the location, the sales team, and/or the connections? If your business works because of isolated and specific factors, then chances are it would be hard to duplicate it.
- Is your business financially stable?
Franchising requires a stable working capital. Aside from marketing, hiring, and training salespeople, you would have to consider the cost of undergoing necessary legal procedures.
- Can you provide consistent value?
As a franchisor, you have to be dedicated about making your franchisees successful. Transactions simply don’t end when contracts are signed, so you must be ready to work and build lasting relationships. Moreover, you must keep in mind that salespeople are the face of your business. Be ready to invest in quality training programs because they will be worth it in the long run.
Expansion is a good sign of success, but before taking on this new challenge, make sure to prepare yourself and your business.