Business owners find different avenues and paths to expand their business. However, franchising is attractive, and for some, even the ideal choice for business growth and expansion. Franchisees need to bring in investment for the ventures. They are responsible for the business and motivated to succeed. It means that franchisors can grow faster than on their own.
Does this mean that it is the best way to expand your business? Many business owners think so, but others prefer to grow on their own. The franchise system has its challenges, and it is like charting a new path.
Timing is an important factor, even if you are well prepared to start a business. You need to ensure that the business environment is right because a premature entry can create unexpected hurdles in business. You may wonder how to know whether your preparations are adequate and franchising, the right option for you. Here are some questions you should be asking before diving into franchise expansion:
A steady revenue stream is the hallmark of a successful business. It indicates that those who join you will be able to make a success of their business. If you do not run your company profitably, it is unlikely that others will invest in your franchise because their success is not assured.
The uniqueness of your products or services is a selling point for a franchisor. Is your product or service in demand most of the time? Unless your brand stands out among the competitors, you are less likely to attract franchisees.
Have you a more appealing, attractive, and better set-up for your service, store, or shop than others in the same sector? Is your product qualitatively superior but lower priced than others? The distinguishing feature of your franchise must be irrefutable.
Franchising a business means you create a brand presence in various other locations. Do you have the teaching ability and readiness to replicate your business model through franchisees for a new set of customers and the business environment there?
The success of your business is not limited to the present times only. You must be ready for the long haul, to serve new customers and meet new demands. Use your business acumen to find out whether your business will have the same stamp of success in other locations. Your product or service has to continue to attract customers over the next few years.
Franchisees are interested in whether they would be able to build and maintain a good profit margin. After all, they stake substantial investment in your franchising business, as well as pay fees and royalties to you. They bear the cost of running the business. You need to make the necessary calculation to know that the franchisee can run the business with a profit margin that provides them a decent return on his investment.
The franchise business is mostly about building and sustaining relationships. A successful franchisor is keen to ensure the success of their franchisees.
Getting answers to these questions is crucial to the success of your expansion effort. If your answers indicate your business model is ripe for franchising, the next step is to talk with experienced legal counsel to guide you through the legal process.
If you want to know more about how to set up a franchise, feel free to get in touch with us at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact us form, and we’ll reply as soon as we can.
Thanks for reading,
The Franchise Institute Team
1300 855 435