When is it time to franchise your business?
Do I have to wait a certain amount of time before I can franchise my business?
That is one of the questions that potential clients will ask me.
The answer is NO. There is no official law that says your business should be operating for a certain number of years before you can turn it into a franchise.
Franchising is the key vehicle that will lead to you expanding your wealth and prominence in business.
Franchising also allows you to expand, scale and increase your customers and revenue alike.
With franchising it allows you to replicate your business and let someone else run the business in another location.
The trade off for this is that you get franchise fees and royalties that occur on a regular basis for as long as the businesses stay in operation.
Have the right team
The right team is the most important aspect of franchising.
When you are getting ready to franchise your business, it is good to have a franchise consultant who can work with you through all the aspects of franchising.
A franchise consultant will help you to map out territories, look at your franchise fees, and royalty structure, work on creating the ideal franchisee and marketing.
A lawyer, traditional accountant and banker should also be a part of your “franchise your business” team.
It is key to look for those who have the most experience in each area.
The team that is running your current business needs to be clear of their processes and systems in the business.
Show me the Money
The financial performance of the business is also a major factor. If your business isn’t doing the numbers it needs to, then turning your business into a franchise does not make a lot of sense.
What a potential franchisee would like to see is whether they would make money if they invest in your business concept.
Another reason you will need to have capital is that when you are a franchisor, you will need money to franchise your business.
You will also need to have capital to support your new franchisees.
You need to have a business that can be replicated. When you franchise your business you want to have consistent operating standards and methods.
You don’t want to have different products and customer experience in one location compared to another.
One of the main reasons why customers like franchises is that it offers a concept that is familiar and predictable.
Is the business scalable?
The business must be scalable in order to franchise.
Sometimes the founder of a franchise knows all the tips and tricks to increase revenue in one location but they do not know how to do it in another location, city or region.
Franchising means duplication and replication.
Sometimes the business also could be operating with very little profit margin so that essentially will nullify it from being scaled. This is a key element.
When you are turning your business into a franchise, be prepared that you are running a completely different business.
Are you ready to turn your business into a franchise?