Do you think your business has what it takes to become a Franchise? If you own a small business that is doing very well, you have come to the right place to learn if franchising is the right expansion strategy for you.
Generally speaking, a business that has the ability to succeed as a franchise needs to have the following characteristics: it is proven and profitable, it can be duplicated, it offers a point of differentiation, there is a wide market for the concept, it will stand the test of time, and there is an added-value to potential franchisees.
Proven and Profitable
The first and most obvious step in determining if your business should expand into a franchise is to ensure your business is highly successful, with an excellent track record, and that there is a sufficient need and want for your product or service. The business must be producing a large profit margin, large enough to entice franchisees to invest in your company. An analysis must be completed in order to ensure there will be enough profit for both the franchisee and the franchisor.
A concept that relies exclusively on the founder, which cannot be replicated by other people will not be an attractive opportunity for potential franchisees. The business model must be able to be repeated by diverse people through procedures. It must be possible to train inexperienced franchisees to operate all systems and both expertise and skill must be transferable.
Unique, Widespread & Long-term
The actual product or service must possess all three of these characteristics in order to be a successful franchise. First, it is essential to have a product or service that offers something unique. In order to attract investors, your concept should deliver something that can be differentiated from competitors. Next, there needs to be a wide market for your concept that is not tied to a specific geographic location. Lastly, your product or service must be capable of standing the test of time. A fad, or a popular trend that is not proven over the long-term, will not be something that franchisees will invest in.
Not necessarily relating to the specific product or service, added-value from a franchisor to a franchisee can be about providing exceptional training or support, having established procedures and systems or possessing expertise in marketing and sales. Investors need to explicitly see a value of your business as a whole and want to make a commitment because of that perceived value.
There is one more very important factor in determining if your business is franchisable. You must evaluate yourself in order to make sure you will be the right fit as a franchisor. Potential franchisees interested in your business will assume you have everything set up in order to run a thriving business and that concept encompasses these characteristics above. Also, you must be willing to give up control, be able to share with people and constantly provide support to your franchisees.
If you want to expand your business through franchising, take the next step. Contact a Franchise Consultant who will help you develop a plan to fit the vision of your business.