In the last few months I have been talking to business owners who have been thinking about expanding their business through franchising.
They are often not sure if their business can be franchised especially if it’s not a food concept or restaurant.
As a franchise consultant and business strategist, I work with entrepreneurs who find themselves at a crossroad when it comes to growing their business.
The options: To open another location or grow through franchising.
Sometimes business owners are not sure if they can franchise their business or what it takes to start selling their business.
The truth is, not every business should be franchised.
Here is a list of questions to ask yourself about franchising your business.
1. How long have you been running your business?
This is a key question in considering franchising your business.
The length of time that you have been operating your business is an indicator that you have had some success with running a business.
Having a proof of concept so that you can share it with other franchisees can be very helpful.
You really need to spend some time perfecting your craft. It is also helpful to go through various business cycles.
This can become important when your franchisees find themselves going through the different stages of business.
2. Is your business profitable?
Profitability in business matters.
Profitability in franchising matters even more.
Profits are a result of how efficiently an owner is controlling the expenses on a given amount of revenue. Basically how well he or she is able to execute on their ideas.
When you are planning to franchise your business you need to know your numbers and be willing to explain to potential franchisees how much they can make.
How much do you expect your franchisees to earn in six months, one year, or five years? You will need to be able to answer these questions.
If a potential franchise owner is thinking about starting their own business, you should be able to answer all the questions about potential earnings.
3. How does your business differ from the competition?
What is it that makes your product different compared to the competition?
What is your unique marketing strategy? For example in the crowded pizza market, Domino differentiated by saying pizza is free if it doesn’t arrive in a certain time period.
Some companies differentiate by moving into the luxury space.
If you are entering a competitive landscape, it is important to decide how you will stand out from the competition. What will you do differently?
Another example is Wendy’s hamburger. The hamburger franchise positioned themselves differently by catering to customers who wanted to see their hamburgers made to order right in front of them.
Keep in mind that demand is just as important as uniqueness.
Your unique product or service must be in demand both by people who want to buy franchises from you, and also by the people who will buy products or services form your franchisees.
4. What is your ability to transfer your knowledge?
Business owners, who are thinking of franchising, often have a lot of business knowledge.
However, they have to make sure that their processes are not too complex that they cannot be taught or transferred to new franchisees within a three month time period.
One way that some franchisors offset this issue is to make sure that new franchisees are already “educated” on the concept or have experience in the field.
5. Do you have documented systems?
All successful businesses have systems. This is even more important in the franchise world.
In order to be franchisable, you must have systems that can be documented in a manner that communicates clarity for new franchisees.
If you are thinking of franchising your business, start documenting your processes even before you get the franchising process started.
6. How flexible is your concept?
How well a concept can be adjusted form one market to the next is vital in franchising.
Ask yourself the question; can my business perform well in Florida and South Dakota? Toronto or Vancouver?
If you run an outdoor concept, how will it perform in a colder environment? What are the options during the off-season?
One example of a franchisable concept that is not location dependent would be a gas saving device. This idea would perform well anywhere in the world.
Take these questions into consideration as you think about franchising your business concept.