16 Dec Thinking of Franchising Your Business?
When it works well, franchising can provide some enormous advantages. You get to expand your business and broaden your reputation. You also tend to get a greater level of commitment and reliability in franchisees than you might in employees. In turn, franchisees get to benefit from implementing a proven business system, while also gaining valuable training and support.
But franchising is a big step to take, and should not be considered lightly. Here is a list of what you need to think about when deciding whether franchising your business is the right move.
Common considerations in franchising
Are you willing to commit to the following?
- Developing and documenting your system. It might be fine to have your procedures in your own head or in notebooks when you are running a small business, but in franchising, you need develop a repeatable system of working and set it all down in writing. This takes time, analysis and commitment.
- Ongoing relationships with franchisees. In franchising, you really do need to be a people person. You need to be committed to supporting and developing your franchisees to help them build their own businesses and achieve their aims.
- Developing criteria for selecting franchisees. It’s a good idea to develop a list of the characteristics you want in your franchisees; in any case you are going to need people who are passionate, keen and totally committed. Half-heartedness will just not do!
If you are up to committing to the above, then franchising may be what you are looking for. If so, you also need to consider the following points:
- Purchase price. Our recent poll showed that approximately 33% of potential franchisees are looking for a franchise under $50K, while 21% would be happy with something between $50K and $100K. It’s important not to go too cheap, as to do so means you have to cut quite a few corners. Providing franchisees with value for their investment is the key here. Ongoing fees also need to be considered. For instance what royalty fee you will charge and if you will have a marketing fund
- Level of support you will provide franchisees. For instance, will you centralise the bookkeeping and collection process, or will you have the franchisees do it themselves?
- Expert advice for the legalities and details. Franchising in Australia is regulated by The Franchise Code of Conduct which is a mandatory code. All franchise systems big and small must adhered to the requirements laid out in the Code
How we can help
There are many steps to franchising a business and it is definitely not something you should do alone. If you do decide to go ahead and set up a franchise, we can help you get started by providing you with the expert advice you need. Contact us for more information.
Thanks for reading,
The Franchise Institute Team
1300 855 435