Care industry a growing market with a big ROI...
Care industry a growing market with a big ROI The care industry has been growing exponentially year on year as the...
Franchising your business can be the best decision you ever make, but this isn’t true for everyone. When you are deciding if franchising is right for you, don’t ever assume that just because it has worked for somebody else, it will work for you. Franchising is a great route to consider for many types of businesses and people, but it’s highly dependent on your unique circumstances.
Most people consider franchising as a route to quick and inexpensive expansion, and even though this is true to a certain degree, it only works for businesses that are suitable for franchising. Franchising is the idea of duplicating your business and brand across multiple territories with a franchisee taking over the reins for their unit.
You must have a proven business model, this isn’t a requirement by law, but it is a common sense one. If your business is only profitable right now because you put in 90-hour weeks, then it isn’t working well and isn’t replicable. You need a business model that has proven and consistent success and is receiving positive customer feedback.
The other factor some forget is that businesses perform differently depending on the geographical area they operate. An easy example of this would be a leisure business that specialises in renting surfing equipment on the coast. This business idea would work well as there is a need for their services in that geographical area, but it wouldn’t perform well in the majority of areas in the UK.
This is just as important as understanding if franchising is right for your business. When you become a franchisor your job role will change, instead of selling your product/service to customers, you will be selling your franchise to aspiring franchisees.
This change in job role will mean you need a different skill set to be effective. The most important characteristic of a franchisor is being an excellent communicator as once you’ve sold to a franchisee, you then need to support them. The support element of being a franchisor is critical as the franchisee won’t be as experienced as you at selling your business offering. This is emphasised when you consider one of the most common reasons for a franchise to fail is because their franchisees have failed. To overcome this, you need to be able to provide support and guidance regularly to every franchisee, all whilst managing your own store, improving your offering and recruiting more franchisees.
You need to research the franchise model and all the responsibilities that are required to be an effective franchisor. If after you’ve done this research you don’t think you are capable of training and supporting franchisees, then franchising isn’t for you, even if you know your business is capable of it.
As mentioned above, being a franchisor effectively makes you a sales person where you need to invest in marketing and recruitment to identify and sell to aspiring franchisees. This isn’t just a question of whether you as a person have the ability to sell, its also does your franchise offering have enough to incentivise franchisees to invest.
When a franchisee comes onboard, they are investing in your business as they feel like its offering will have a positive return on investment. To get to this point you need to be able to demonstrate that your offering will be able to provide this return on investment. This will require you to have a very positive and secure projected returns figure that needs to be market tested depending on the location they are interest in. You must then compare this to the amount of investment that will be required and the deducted royalties you receive. If this doesn’t present an attractive offer, then you won’t receive any quality franchisees and franchising wouldn’t be suitable.
This question can only be answered by yourself. You need to take everything above into account plus your own research to understand if franchising is right for you. Franchising can be the best way to expand and grow quickly, take advantage of market opportunities and utilise additional experience from business partners. It can also be something that just wouldn’t work for your business, or something that you wouldn’t enjoy or wouldn’t be able to sell.
Making this decision shouldn’t be rushed as it requires extensive research and soul searching to fully understand if its suitable for you. If you would like more information on how franchising works then please do get in touch and one of our franchise experts will guide you on the right path.