You’ve invested years of blood, sweat and tears to transform the dream of a successful small business into a reality, and finally you are reaping the benefits. Congratulations for beating the odds and seeing your project through! It’s hard enough to make a small business work, but if you get to the point where you are starting to get offers to turn your company into a franchise, that means you’ve done an awful lot of things right. Change is always scary, but in this case you should certainly give it significant consideration. Franchising your business is both popular and often quite profitable. It’s an easy path to expansion that has proven valuable for consumers and owners alike. More than half of all retail sale transactions in the United States come from franchises. But is it a fit for you? Here are some tips to help you determine whether you should franchise your successful business.
The first thing you need to figure out is if you will be comfortable with a different role within your company. Once you franchise your business, the very foundation of your business changes. To this point you’ve probably been involved with basically everything your company did. You handled the purchasing, negotiated the deals, dealt with customer service issues and took care of all the hiring. That won’t be the case with your franchise. You’re basically selling the branding rights away, so you’ll focus more on leadership and organization than day-to-day activities. Will you be comfortable with that?
Next you need to think about the franchising possibilities for your industry. A franchise won’t always work. If your industry is ‘fragmented’, which means most of the players are independent, a franchise could gain traction. If you have the opportunity to literally create your market, then a franchise might work as well. If your business was built out of finding a need and then filling it, things could work out. Finally, if you are operating in an industry where the big boys aren’t doing a good job, your small franchise could certainly make a splash. Just make sure there is room for your franchise before taking that step.
Now think about the services and products your business delivers. Is it possible to standardize them? A complicated concept that requires your involvement all the way around doesn’t make for strong franchise potential. The successful franchises have a simple product or service that they deliver very well, with a manageable economic framework. If there’s a disconnect here you’ll need to find a way to simplify and standardize things, or a franchise may not be the best option.
Finally, are there enough entrepreneurs out there who might want to get involved in your business model as a franchisee? Remember, your work must be attractive to others if your goals are to be met. You’ll need a huge pool of potential business partners to choose from. They have to posses skills that would make them successful, as well as the financial ability to take the plunge. Consider checking out FranchiseExpo.com and doing a bit of research. See what has worked for others, and think about your business as an outsider might. It attracted you, so certainly there’s something to it. Just be sure it can scale, or you’ll do a lot of groundwork for no results.