If your start-up has taken off and is poised to continue growing in strength, popularity, and stability, you may be considering your options to expand your reach and gain a broader customer base.
A franchise business is a good fit for many types of businesses, but it’s not the right choice for everyone. We’ll go over a few questions to ask yourself to help you determine if becoming a franchisor is right for you. If it is a good fit, you’ll want to follow our tips for success and watch out for the pitfalls to avoid.
Is franchising right for my business?
Answering the following questions will help you decide whether franchising is a good option for your business.
Are you ready to grow?
Is your business ready to expand into a new region? Are you making a steady profit? Are you growing where you are? If the answer is yes to any of these questions, it may be time to explore franchising.
Can you surrender some control over your business’ growth?
Once you determine that your business is a good fit for other markets, you can start building a plan to open in a new location. You could do it yourself, but that will require significant financial investment, and it will consume your life until the new site is up and running.
Even after the new location is established, it will still take a considerable amount of your time to run a second location. If you grow your business from there, you’ll repeat this process over and over.
If you can handle letting go of some of the control, franchising may be a better fit. When you choose that business model, you avoid much of the financial investment, ensuring you have adequate free time and less stress.
Is your business likely to succeed in a different location?
If you’re ready to grow and you’re willing to give up supreme control, your next questions should concern the new market.
Is your product or service a good fit for markets outside of your current location? What’s the local vibe, and are you a good fit? What’s the average income, and does that change your approach? You must learn about the market you’d like to open in if you hope to be successful.
What are the best tips for starting a franchise?
If you want to start a franchise, you’ll need to spend some time learning best practices.
Determine Whether Your Start-Up is a Good Fit
There’s a reason why restaurants are the number one type of business franchise. The franchise model works for that type of business. It might not work so well with your business. You will need to check out your competition and see if they’ve franchised and if they’re experiencing success.
Do Your Research
One of the best resources available is a franchise consulting firm. If you’re unfamiliar with everything that goes into franchising or have a solid understanding but want to make sure you’re on the right path, a consultant can help you.
Since they’ve been in the business and helped many other companies franchise, they know what to watch out for and can provide priceless advice.
Make a Plan
Don’t wing it with a new franchise. You need a well-developed plan. You need goals, key performance indicators, problem-solving backup ideas, and a step-by-step method for making your franchise a reality.
Develop a Contract
If you franchise once, you’re probably going to do it again, and you want to make sure that your contracts are the same so that all your franchises are run similarly and agreements are fair between franchise owners.
Sure, you have a plan, and you’ve put a lot of time into it, but you’re still learning as you go, and you need to be willing to update your plan when something isn’t working. Allow yourself to learn because you don’t know everything.
Learn From Your Mistakes
The saying, “Know better, do better,” applies to just about every facet of life, including your entrepreneurship. Instead of letting mistakes bring you down, commit to learning from them.
One way to help you keep track of your success and failures is to journal your experiences. Depending on your personality, you may only remember one or the other of successes and failures. A journal will help you recall the entire experience.
Pitfalls to Avoid
The list of pitfalls to avoid is endless, but we’ll highlight some of the most common ones that seem to entrap new franchise owners.
Rushing into a New Business Venture
There’s a balance to be found between rushing into franchising and not starting because you’re afraid to take a risk. But if you franchise without a good plan and well-developed contract, you could damage your brand.
Thinking You’re Superior
No one will enjoy working with you if you think you’re better than everyone else. You must treat your franchise owners with respect and as equals.
Avoiding Professional Services
As mentioned earlier, professional franchise consultants are a valuable resource. They’re often worth every penny. If you try to save money by not hiring a team of consultants, you’ll likely waste more capital when you make mistakes along the way.
Training for the franchisee will take time if you want to maintain your brand and see success. Insufficient training usually results in insecurity and mistakes. Putting the investment of time into the training will be well worth it.
It’s more efficient to learn the correct way to do something and get it right the first time than it is to do it wrong and have to fix it.
Your core values are essential to your brand, and you need to be intentional about passing those core values to your franchisees.
Growing Too Quickly
Growth is good, but growth without a solid foundation is dangerous. Make sure you seek advice from those who have experience as franchisors and consult with your legal and financial teams to ensure that you’re all in agreement with your growth goals.
You should make sure you have a high-quality business owners insurance policy to protect your business against unforeseen risks.
Starting a franchise is an exciting venture. It might be just the right fit for your start-up business, but you should go into it with your eyes open, knowing how to succeed and what to avoid.