The great thing about franchising is that there are so...
Should You Franchise Your Business?
When you are running a successful business, you may start to think about ways of earning more money from it. One of the ways in which many people choose to do this is by franchising the business. Before you jump in feet first, however, it is worth asking yourself the following three questions.
1. Is your business suitable for franchising?
Is your business the type of business that can be replicated in different locations and by different people, or is it bespoke to you, your location and your clientele? Is it successful and do you understand what you are able to offer potential franchisees in order to attract them to your brand? By franchising your business, you will need to allow franchisees to duplicate your business model in different locations, use your trademarks and support them with marketing material and training, so you need to be confident that you are able to relinquish this control without affecting the business you have already worked so hard to build.
2. Do you have enough time to support your franchisees?
It is likely that you will have less time for your own business when you start taking on new franchisees as you will need to spend time training, mentoring and supporting them. You will need to plan for this, perhaps taking on extra staff at your own location or accepting that you will need to work longer hours initially to keep your own business running while getting your new franchisees set up and succeeding. Even once your franchisees are up and running, it is likely that you will spend time mentoring them and dealing with additional financial transactions, so you will need to factor this into your considerations.
3. Can you afford to franchise your business?
Although franchising your business should make you more money in the long term, there are many costs that you will need to cover up front. It is vital that you ensure that you are on sound financial footing and can continue to be successful while spending money on attorneys, legal documentation, traveling, additional marketing and promotional material, and perhaps even on stock for your franchisees while getting them up and running.
If you have answered "yes" to these three questions and are certain that franchising your business is the way you wish to expand, you can look forward to watching your brand grow, gain market share and benefit from the success of your franchisees. It's an exciting journey to set out on, and we wish you the best of luck with it!
How to franchise your business
For many people, the step into franchising comes when a personal project becomes a successful and rapidly expanding business. When this happens, there are typically three choices:
Hiring people to operate on your behalf can be an effective way of maintaining full control over your business, but it comes with risks. What if the new location isn't as successful? What if you cannot staff it with the right people? What if inventory goes unsold, or what if your business's reputation gets damaged due to an incident at another location that is outside of your control? Of course, all of these risks can and often are successfully mitigated, but considering all of the things that could go wrong tends to be what leads people seeking to grow their business to consider franchising it instead.
When you franchise your business, you offer other entrepreneurs the opportunity to replicate your business in their location for a fee. You provide them with your business model, marketing and promotional materials, training and any other support that they might need to successfully run the business as their own. In exchange, you receive a percentage of the income they earn.
Before making the leap into franchising your successful business, make sure to consider whether your business is actually saleable. Could someone else make the same success of it as you have, and will your existing business suffer if you end up spending more time supporting your franchisees than concentrating on the customer base that you have already built up? If you are unwilling to sacrifice any time or effort that you currently put into your business, franchising may not be for you. Getting new franchisees up and running will undoubtedly eat into that time, especially at first.
However, you can invest in a Canadian franchise consultant, who can help you with your finances, developing a business plan, valuing your business, selecting your franchisees and getting them started.
It is also worthwhile getting your accountant and attorney engaged early as well, as franchising brings with it a lot of additional costs that you will only get back once you have received your fee. At a minimum, you should expect to pay out for franchise agreements, marketing materials and training for each new franchisee that buys into the business. In order to set the correct franchise fee, you need to understand all of the costs you will incur - and don't forget to value your time as well.
You will need your attorney to write Franchise Arrangements and provide support with all aspects of business law and data protection.
There is a lot to consider when growing your business, but franchising is a time-tested way to help a successful small business become a successful large business, so it is well worth pursuing.