Here at FranChampion, our goal is to discover and to assist a select number of businesses grow exponentially through franchising. When it comes to developing your franchise, getting the help of an experienced franchise consultant can smooth the way. Getting the resources you need and the support you require doesn’t have to be difficult. If you’re just starting to consider franchising your business, here’s a short tutorial about franchises:
In short, a franchised business has many satellite locations that sell a standard food or other product or service developed by the franchisor, under the umbrella of the franchisor’s brand name, and with the authority and brand personality that accompanies the original business. Most fast food stores are actually franchises, selling a standard menu, developed by the core business. While restaurants are the most common type of business to be franchised, they are by no means the only type of business that can be franchised.
Franchising is a great option for businesses that want to expand where they offer their services. It’s a great way to grow quickly with the help of outside capital. The franchisor provides training, support and in some cases product to the franchisee, implementing the same operational systems in each location. This allows businesses to offer the same goods, in the same format, under their brand name, with wider market penetration.
Many entrepreneurs will opt for purchasing a franchise, rather than simply starting their own business because of the support and improved success rates. Buying a franchise from an established business lowers the initial risk, since the business is already successful, has a set system of operations, and already has a recognizable brand and credibility.
Is My Business Right for Franchising?
It is difficult to say, at first blush, whether a business is right for franchising. Determining the viability of a franchise organization requires an examination and analysis of your business and the market. If you want such an analysis, FranChampion can provide a complementary consultation which will help you determine whether or not you can benefit from franchising. If you think your business could be candidate, but you are not quite sure, take a look at these criteria:
Credibility has its own range of factors, including the size of your business, how long it has been in operation, its brand strength and recognition, and its overall business strategy. All of these should be considered before determining to expand through franchising.
Is it possible for you to transfer control of part of your operations to another person? This is an area where many business owners struggle. Can you teach someone else your business practices, ethics, standards, policies and philosophy? Do you enjoy mentoring others? How easily you can transfer the “personality” of your brand to another person significantly affects your ability to have a successful franchise system.
Not every business is suited for every market. There are locations in the country and around the world that are just not going to be a good fit for your franchise. However, if your business does not have enough adaptability to adjust to almost every market, it may not be a good candidate for franchising. A trained FranChampion consultant will help you explore your options to arrive at the right conclusion.
Having a prototype store for hosting franchisee due diligence events, otherwise known as “discovery days”, is a very important part of the model. Potential franchise buyers want to see that the system you are selling really works. This location also serves as a place for you to test out new processes, products, or services you want to implement throughout the franchise.
In order to transfer what is essentially your brand to a new franchisee, you need to have your entire system documented. This means all policies, procedures, practices, forms and training materials must be in written form for easy conveyance to a new franchise owner. A well written document ensures that the franchisee can easily duplicate the proper processes in his/her store.
It is paramount that the initial cost of purchasing a franchise is in reach of the average entrepreneur. Equally important, operating costs also have to be manageable. Finding a way to make the purchase and the operating costs manageable for someone who wants to buy a franchise is the best way to ensure your business can be franchised.
It is essential that your business has shown profitability and a good track record in order to ensure the success of the franchise system. Franchisees are depending on your successful operating business model.
Taking a look at the market to determine whether or not a franchise organization has long-term viability is the first consideration. Also, taking a hard look at at your competitors and evaluating their franchises is a key component to determining whether or not the market is ripe for your development.
Compared to other forms of expansions, franchising is relatively inexpensive. That does not mean it has no costs; rather, it simply means that franchising can require less capital. You will need capital to cover expenses involving an array of professional service fees including: franchise consultation, legal advice, and state registration requirements.
Aside from not having sufficient staff to manage a franchise organization, weak management is the number one cause of franchise failure. A lack of experience can make it impossible to succeed. This is where working with a FranChampion can be extremely helpful.
What Are the Benefits of Franchising?
If you are on the fence about franchising, it’s time to consider some of the benefits of this process. Franchising is one of the best ways to expand a business; here are just some of the reasons why:
A traditional expansion can cost millions and is far out of reach of many businesses. Franchising, on the other hand, is a very inexpensive way to expand your business. Most of the businesses that FranChampion works with see a return on investment after selling just a few franchises.
There are very few ways to quickly expand your business, especially if you have limited capital. Franchising is a good way to expand rapidly, without having to invest millions.
When a business expands in the traditional sense, the business owner simply has more responsibilities and more people to govern. When a business franchises, however, each location is managed autonomously by employees and the owners are motivated to succeed, as they have “skin in the game.”
For individuals that want to own their own business and be their own boss, but do not have the capital, skills, or means to start their own business, a franchise is an excellent alternative. Purchasing a franchise affords the entrepreneur the benefits of an established brand image, operational system, and franchisor support. Purchasing a franchise can mean sidestepping years of planning and frustration. In return, franchisors typically collect a royalty fee in return for their services.
Franchising allows you to garner royalty and franchise fees for mentoring your franchisees. You can potentially earn more money without having to borrow or dedicate capital to adding corporate locations.
Franchising is a great way to add additional revenue channels. It also enables you to share your brand with more people. Using a FranChampion consultant to navigate through the endless fields of landmines is crucial. Franchising may not be right for every company, but it could be right for yours. Thank you for considering FranChampion.