A franchising journey isn’t a step taken lightly. If you haven’t set up your business to be franchised beforehand, it’s a venture that could drive your brand into the ground.
If you are considering franchising, take an honest look at your business and ask yourself if it’s truly ready. If it’s not, of course, that’s okay. A lot of businesses aren’t, but they can work towards it.
If your business model cannot be replicated profitably, this is the biggest flaw in businesses making the transition to franchising. A replicable business does not require you micro-managing it at all hours of the day. Ideally, you want a model that can be duplicated without your ongoing assistance. If yours isn’t, consider ways to adjust how you’re operating to make it worthy of a franchise.
Here is how to franchise your business successfully:
Meet with franchise advisors.
Before you commit to franchising, build yourself a team of advisors. This would typically include a franchise lawyer, an accountant, and a consultant. Everyone should have a fair knowledge of franchising, advise on different franchise options, the associated expenses, and the operational requirements.
A franchise lawyer is particularly valuable as they can inform you of what to expect legally and how to build out a franchise agreement.
Support your franchise with strong financials.
If you’re struggling to pay rent and are barely breaking even, now’s not the time to franchise. No franchisee wants to license a brand that will not be profitable. Suppose you aren’t generating a strong financial performance. In that case, you may look into strategies such as increasing your price on products or services.
You can also consider creating profitable add-ons, cutting down on trivial expenses, switching suppliers, and more. Get your business to its most attractive state, financially speaking.
Support the franchisee.
A franchise isn’t a hands-off affair. You will be called upon as an advisor to your franchisees, offering them input and financial support at times. If you aren’t generating enough capital to meet the needs of a franchisee, that can sink a new franchise after a short period of tumbles.
Every new franchise is an upfront investment. You have IP protection, market research, and marketing to invest in, among other things, to help establish a new location.
Consider buy-in and start-up costs.
When you start up a new franchise, you’re starting a new business more or less but under the advantages of existing branding. There will be start-up costs of buying equipment and getting set up. Don’t underestimate these factors.
Ensure you have an accurate number to relay to a franchisee, so they aren’t caught off-guard by what’s coming. The buy-in should accurately reflect this as well.
Scout out likely locations for profit.
Suppose you can’t find the right locations to put a franchise. You don’t want to infringe upon your existing business. You want the location to be somewhere that makes sense, with strong population density and where your target audience exists.
There are a lot of metrics to consider. When expanding your small business, it’s best to take it slow and set yourself up at the right location with the right franchisee at the helm.
Create a franchisee manual
Put together a document that’s specific to franchisee owners. Outline what’s possible with your business model. Highlight what will be expected of a franchisee’s performance and what they commit to. This can include directives on operating, relevant preparation charts, a guide to standardization, a vision for how each franchise is expected to conduct business, and more.
Get ready for hard work.
As the owner of your business, you have to get ready for a change in the job title. Before franchising, you might be overseeing the day-to-day operations of a location. A lot of people are happy with that. When you franchise, you jump into managing and coaching a group of franchisees. It’s a different responsibility altogether.
Some business owners find that they don’t appreciate it as much or that it’s not necessarily a strong skill. If it isn’t and you still intend to franchise, investing in business management courses can be a major asset.
Attract franchisees and workers.
A big issue that franchises across the country are experiencing is attracting and hiring workers. You need a strategy to find the right workers and franchisees. This strategy will likely change over time, just like it would have from pre-pandemic to today.
How you find, hire, and keep reliable, strong team members will make or break the business. Just like in combating the challenges of the labour landscape, you need to keep your ear to the ground and be prepared to adapt.