Is your small business successful and growing? Do you continuously get out-of-town clients wondering when you’re going to open an area in their areas? Are you covertly sort of bored running simply one, smoothly operating location and want to feel the enjoyment of your start-up days once again?
If your answer to these questions is an unqualified “Yes,” perhaps you’re ready to franchise your business– the key word is “possibly.” To see if you’re actually in a position to franchise, ask yourself these six questions:
1. Do I have the standardized systems required to franchise my service (or can I produce them)?
To franchise a business, you need functional systems and processes that can be standardized to offer a consistent product and services by all franchisees. Standardization is also needed to train new franchisees and their employees. For instance, if you own an ice cream shop, do you have a written system detailing all the steps of serving consumers, such as:
- How and when to clean the ice cream scoop
- Whether to place on gloves first
- Just how much ice cream, hot fudge sauce, toppings, and other active ingredients to utilize (such as “one full scoop” or “one-fourth cup”).
These little information are what can make or break a franchise’s success and success. If different franchisees serve ice cream in a different way, you could run across these problems:
- Your ice cream cones and sundaes won’t be consistent, which will negatively impact your brand name track record. One area might serve heaping scoops of ice cream, while another may cut corner.
- Any locations that aren’t constant about determining and weighing ingredients will see less earnings.
- Unless there’s a basic procedure for serving, consumers may wait longer, which injures the customer experience.
Before you even think about franchising, you also ought to have an employee handbook and an operations manual and utilize them regularly.
2. Does my service rely on my individual presence?
This is an obstacle for a great deal of service companies, especially those that began as one-person business. For instance, if you’re a gifted graphic designer or hair stylist, customers may only want to work with you– not your workers, who they perceive as less experienced. It’s impossible to franchise with only one of you.
If you have this problem, you can lead the way for franchising by training employees to supply the exact same services you do (create an operations handbook to teach them). Next, start easing your consumers into dealing with your employees instead of with you. Some methods to do this are by charging more for your individual services and less for services offered by employees (as hair salon owners frequently do) or by having employees deal with all of your brand-new consumers while you keep serving your “regulars.”.
3. Am I all set to follow all the rules and guidelines to franchise a business?
Franchising is packed with bureaucracy and controlled by both state and federal laws to protect franchisees. The FTC’s Franchise Guideline requires franchisors to provide prospective franchisees a Franchise Disclosure Document (FDD) prior to purchasing a franchise. This legal file typically runs to be numerous pages. It offers detailed information about 23 aspects of the franchise offering, including:.
- Preliminary and ongoing expenses.
- Any lawsuits in which the franchisor has actually been involved.
- Background of the franchisor and its crucial workers.
- List of current and previous franchisees and places.
- Three years’ worth of financial declarations.
- Your responsibilities as a franchisor (such as supplying training or marketing assistance).
- How franchise renewal, termination, transfer, and conflict resolution will be managed.
Collecting all of this details and preparing the FDD document is time-consuming. It likewise needs legal support, which can rapidly add up. If you don’t have the perseverance (or the finances) to fulfill the legal requirements of selling franchises, it’s not time to franchise yet.
4. Exists a market for my organization idea outside my area?
Organizations that work in one city or state don’t always equate to other parts of the nation where consumers aren’t knowledgeable about the idea. For example, Hawaiian shaved ice would probably be a hard sell in Montana, and bagel shops took years to vacate New York and catch on in the Midwest. Before you attempt to franchise, do your homework to discover:.
Is what I’m selling familiar in other areas of the country, or will I need to educate customers on my principle?
Is there an excellent supply of my target consumer base somewhere else in the nation?
Exists an excellent supply of possible franchisees in the areas I’m thinking about? An idea that requires white-collar management experience might find more franchisees in a metropolitan area than a rural one.
5. Is my organization economically successful?
Having one successful location is just the beginning. In general, it’s finest to have at least three effective places up and running beneficially before you take actions to franchise a service. The procedure of opening and running several areas will provide you a great idea of what’s associated with opening franchises and helping them prosper.
Deep pockets are also required to:.
- Total all the essential legal documents.
- Market your concept to possible franchisees.
- Employ salesmen to offer the franchises.
- Offer training and continuous assistance for your franchisees.
This can cost hundreds of countless dollars or more. If you can’t finance this internally, searching for a service loan to do so will offer you an excellent idea of whether your franchise dreams are sensible.
6. Do I enjoy management?
If the hands-on elements of your company is what keeps you going, you might be in for a shock when you franchise. You’ll no longer handle the everyday operations of one location. Rather, you’ll be more like a corporate manager, managing tasks such as:.
- Trying to find brand-new regions for franchise expansion.
- Developing marketing prepare for your franchise.
- Meeting prospective franchisees.
- Training brand-new franchisees.
- Supplying ongoing support for brand-new franchisees.
If the idea of taking on a management-oriented role fills you with dread, be ready to promote or employ a supervisor who can take charge of your franchising operations.
Does franchising still sound amazing? You can get more details from the International Franchise Association and the FTC site.