Are You Ready To Franchise Your Business?
Many business owners dream of franchising their business, but to be truthful, it’s not the solution for every entrepreneur. Why? Because your role, once you decide to become a franchisor will completely change. You may have gone into business in the first place because you had a passion for the product or service and loved networking and helping customers solve problems. But as a franchisor you will be a different kind of entrepreneur. Are you ready to franchise your business?
Hold on, don’t be in a hurry to turn your business into a franchise. Most experts would agree that it is best to have your business on a very solid footing before you think about the next steps for expansion. Here are some questions to ask yourself before considering franchising:
- Is your existing business profitable?
- Will need a capital infusion to expand your business into a franchise?
- Does your business model have sufficient profit margin so that the franchisees will be able to pay royalty fees and advertising fees and still make a reasonable profit?
- Can you provide the value for the royalty fees?
- Do you have a training store set up?
- Do you have a franchise training program established?
- Have you developed a franchise training manual?
- What will be in your franchise agreement?
- Do you have franchise disclosure documents?
- Have you automated as many back-office tasks as possible?
- Do you have supplier agreements in place to enable bulk buying?
- Have you set up a few company stores to test the viability of a franchise?
- Can you start your franchises in a local area first?
- Do you want to manage businesses or run businesses?
- When you are a franchisor, the main part of your business will be running the franchisees, not running your business.
- Can your business survive when you are not running it day to day?
In our book for women entrepreneurs, Fabulous Fempreneurship, Marietta Snetsinger, Chief Solutions Officer, Ascend Franchise Solutions explains franchising. Marietta works with small and emerging franchisors on a daily basis. With almost 20 years of experience in the Canadian franchise industry, she is passionate about establishing solid operational systems and leadership within franchise organizations.
She offers this advice.
Franchisability: Seven Things to Consider If You Are Thinking About Franchising Your Business
As you contemplate the decision to convert your successful business to a franchise system, look toward at the best practices of successful franchise organizations. Many enduring franchise brands share similar values around operating their business model and know the value of continually building relationships with their franchise partners.
Understanding the Franchise Relationship
Getting educated about how a franchise model works is central to building a strong system. This is not a relationship based upon parity and this needs to be clearly communicated early on and as systems and process are documented. It is critical that the “emerging” franchisor understand the nature of this arrangement and business model well before they sign their first franchisee.
Keep the Lines of Communication Open
Communication within the organization may take on many different forms; however, the underlying message ought to be transparent and efficient. Creating effective channels for communication to flow both ways is vital. Staying connected to franchise partners and being open to receive input from franchisees will go a long way.
Pinpoint Critical Success Factors
Building a franchise system requires a lot of effort and takes time. Establish a set critical path which identifies the order of the decisions, tasks, and actions that need to take place to best structure the franchise model. The pathways need to be prioritized and inclusive of timelines. This has been proven to increase the likelihood of a successful outcome.
Know the Unique Selling Proposition (USP) and Unique Franchise Proposition (UFP)
Showing evidence of how and what exactly makes a franchise concept unique is crucial. At the customer level or as a business opportunity, an organization must articulate how their needs can be met, in a way that is unique and different from the competition. A clear understanding of what makes your franchise concept different will facilitate better positioning for success.
Focus on Key Performance Indicators (KPI’s)
Key performance indicators (KPI’s) are imperative, and a culture or system that knows the value of numbers is far more likely to be successful. What needs to be measured, how it will be shared and more importantly how it the information will be used to make important business decisions are all part of the franchise’s KPI management structure. Strong franchisors make sure this is engrained as part of the franchise system to keep everyone focused on profitability and the relationship to each number within this equation.
Adhere to Core Values
Know that your business can’t be all things, to all people. It’s wonderful to adapt and be innovative but don’t get so far off track that you forget your original values and mission. Identify what is sacred to your entity. Preservation of high standards, core values, and performance that franchisees find compelling is critical. At the same time, this does not mean that you are unwilling to try new things, but maintaining alignment to your core values and goals is paramount.
Be Prepared for Change
It is crucial to adapt and transform in accordance with the times. Be adaptable and don’t be afraid to make calculated changes within your organization. What’s worked in the past may not work today, so always be ready and open to change.
Ultimately, building a strong franchise system takes considerable commitment, effort, and engagement. Managing the expectations of the franchise relationship is pivotal to strong and sustainable success.
Founder and Franchisor of SupperWorks, Joni Lien, talks about the SupperWorks story in a recent podcast. From one store in Oakville, Ontario to multiple franchises in Ontario, Joni explains why they made the decision to franchise and how she was able to prepare an operations manual and get started very quickly.
XL Consulting Group is a full-service marketing consulting company helping companies with branding, logos, website design, marketing strategy and so much more. Contact us here for a complimentary 30-minute chat on how we could help your business grow.
Marketing Strategist and web designer at XL Consulting Group. Author of Fabulous Fempreneurship, a startup guide for women entrepreneurs.