A successful franchise scheme is undoubtedly a strong, practical way to expand your business.
That said, not every business is necessarily suited to franchising. To work well, any franchise scheme must fulfil the expectations of both franchisor and franchisee.
This balance is not always easy to achieve and is one reason why any potential franchise idea must be explored and set up very carefully to yield benefits and avoid trouble further down the line.
So, here’s what this, sometimes, complex process involves and how to get the right advice from the outset.
Assessing the franchise option
Though many franchises require considerable franchisor investment at the outset, the outlay is generally a lot less than opening multiple outlets of your own.
Your franchisees will trade in their own right but will be licensed to sell your products or services, while you receive an agreed share of the profits in return.
While that means someone else uses your brand and business methods, the way they can do this is strictly controlled by you through a legal franchise agreement.
A successful franchisor is one who can create, and sustain, a win-win situation: Your franchisees get a packaged business idea which can generate profits from the start, and as the franchisor your own returns increase because the efforts of your franchisees also help your brand to grow and prosper.
To begin making this decision, always take into account what existing franchises are doing and their own franchise models. A lot of established franchisors are happy to educate new franchisors on the process; therefore, it is worth asking for their advice directly to learn more about the processes.
Is the franchising route right for you?
If you are looking at developing a franchise, you must have an effective and profitable business model which could be successfully replicated by others.
For most would-be business franchises that means trialling your existing business model to develop and refine a workable franchise model.
Not every great business will succeed as a franchise. For instance, you must be sure the potential market will sustain your planned number of franchise outlets, while your product must be strong enough to capture business ahead of your rivals.
And importantly, you must be able to demonstrate to your prospective franchisees that they could not do as well independently, or by choosing a competing franchise.
Advice about how your current business stands is invaluable ahead of plans to expand; so speak to trusted friends, colleagues and even family who will be able to offer you candid advice about your business – for instance what could be made more efficient and could the business still work if they were to take the reins like a franchisee.
Getting the right professional advice
Obtaining sound advice is a critical part of developing a good franchise.
From a legal perspective, you must ensure your brand reputation, valuable trading secrets and intellectual property rights are properly protected.
Equally, your franchise agreement must be well drafted to ensure there are no mistakes or misunderstandings which could lead to costly franchise disputes at a later stage. In particular, the document must clearly set out the rights and responsibilities of both parties.
Beyond legal issues, you will need to create a comprehensive operations manual to support and guide your franchisees as they trade under your brand. You must also decide what kind of initial and ongoing support your franchise outlets will need to build a successful business.
A professional franchise consultant can always advise on these and related matters. However, not all franchise consultants can be relied on to deliver an effective service, so it’s important to seek trusted advice and recommendations before approaching anyone for help.
Starting on the front foot
Unless each franchise is a success, you risk harming your brand. That’s why it is so important to select the right franchisees in every case.
Offering high-quality training and support is another key element, and no franchise outlet can succeed unless your franchise blueprint has been honed to perfection before you enter the marketplace.
Franchising a business is not for everyone, and it can often turn out to be a demanding route with many challenges. However, if done well, a good franchise is a very viable means of growing your business.
By Paulyne Antoniou, Digital Content Manager. Paulyne has produced regular videos and editorial for many years with small businesses, franchises and industry professionals for all titles in the Dynamis Stable including BusinessesForSale.com, PropertySales.com and FranchiseSales.com.