How to grow your business by franchising
Posted: Mon 31st May 2021
Growing through franchise is particularly suited to companies that have an easily transferable business model and a process for making a profit.
Some examples might be dance activities for children, or tasting parties for food fans. The aim is to perfect a model that works in one area and then grow by enabling others to replicate it.
The benefits of franchising
Franchising has many advantages if a business is considering it for growth purposes. It's far more cost-effective, faster and there is less management involvement, as the franchisee becomes the local owner of the business and the one with expert local knowledge.
However, in addition to the many areas to consider before franchising, it's crucial to get expert advice on whether your business is ready for franchising or how you can plan ahead to develop a business that can be franchised in the future.
It's also extremely useful for business owners to understand:
the entire franchise process
the role of a franchisee
the role of a franchisor
what franchising costs
the financials involved
the key pitfalls
As long you seek advice, plan ahead and to your research, you could be on your way to growing your business faster than you ever could imagine.
What to consider when franchising for growth
Here's a checklist so you're prepared when interested franchisees come calling.
Track record
Make sure the business is a working model of success. Franchisees will pay money for something they can see has a clear path to profit.
Be prepared to make your own accounts public or at least show what the franchisee can expect to earn if they follow the training and guidelines.
Your brand is also an asset that's being bought, so make sure you rightfully own it with trademarks and intellectual property protection in place.
Training
The business model is something that has to be teachable. In other words, can you train people (some of whom may be quite new to business) on how the operation works?
Toolkit
After training, provide a comprehensive toolkit or manual that guides the franchisee with tips on marketing, sales, finance and growing the business.
The toolkit could also include marketing templates or collateral such as posters, stickers, flyers and so on.
Technology
Does the franchise involve a website for serving customers or an intranet platform for accessing internal support? Either way, deliver an easy-to-use system with effective data collection so you can track progress and performance.
Team
Do you have the right team in place? That is, a support resource for franchisees and support for you, the business owner, in the form of a mentor or adviser.
Territory
Is your franchise opportunity restricted to a certain territory (for example, does a franchisee pay to have access to a particular geographic area)? If so, define this from the start.
Testimonials
Consider doing deals in the early days so you can expand quite quickly. This will be a factor in future recruitment as potential franchisees will probably ask to speak with existing ones. Have some quotes available to offer.
Termination
Put provisions in place to terminate the agreement if it's not working – from either side!
Relevant resources
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