So your company is taking off and you’re trying to figure out how to expand. Could franchising your business be the answer?
You should keep several factors in mind when looking to franchise your business. There are the obvious questions one would ask of any business owner including: Is the business credible? And is there adequate differentiation from franchised competitors?
But there are several other factors specific to franchising that a business owner must take into account before diving head first into franchising. A potential franchisor should be operating a business that can be taught to a franchisee in a relatively short period of time. Likewise, that system must be documented in a manner that can easily be communicated to those franchisees.
Furthermore, it’s important that the franchisor has a successful and refined prototype that demonstrates that its system is proven and it must be adaptable, so when franchisees are awarded a franchise, the franchise can be adapted from one market to the next.
Among the most important considerations are the economics of the business. It must be affordable enough so the prospective franchisees can pay for them, but also should reflect enough of a profit where those business partners can make a living while also being able to pay royalties and any other fees associated with operating your concept. If the business cannot generate between 15 percent and 20 percent return on investment after royalties are deducted, it’s going to be difficult to keep franchisees happy. And, keeping your franchisees happy is key to your franchise success.
Franchising a business can be a tremendously advantageous – and fast – way of expanding, particularly for the entrepreneur who lacks the time, the manpower and the finances to open several company-owned locations alone. It’s a growing strategy that has remained strong even during times of economic uncertainty.
So, is franchising right for your business? The experienced consultants at iFranchise Group can help you determine if franchising is the best expansion strategy given your personal goals. iFranchise Group can help companies that are considering franchising for the first time with strategic planning for growth, operations and training documentation, franchise marketing and sales, and other vital services. For further information, get in touch today at [email protected] or 708-957-2300.