5 Questions to Ask to Determine If Your Business is Ready to Franchise

5 Questions to Ask to Determine If Your Business is Ready to Franchise

Franchising is an attractive opportunity to many business owners who are looking to grow and expand.

One of the biggest challenges hindering growth and expansion for businesses is the capital requirement – building new locations, equipment, leases, employee wages, etc. By franchising your business, the financial burden is placed on franchisees, and therefore, it is a great way to obtain expansion capital. Therefore, you can typically grow your business more rapidly than you could with investors or lenders.

But first, it is important to evaluate some key criteria to determine if your business should consider franchising.

IS MY BUSINESS READY TO FRANCHISE?

Here are 5 key questions to ask if you are thinking about franchising your business.

1. Is my business credible?

Part of the appeal of buying a franchise is to reduce perceived risks; therefore, interested franchisees tend to be more risk adverse. As a result, your business should currently be successful, and maintain a track record of success before considering franchising.

Your business model should be proven and you should have at least one operating prototype in place before looking into franchising your business.

Here are some key credibility metrics:

•  Years in operation
•  Number of units
•  Revenue, Profitability

2. Is my business unique?

Individuals interested in starting a franchise are able to choose from over 3,000 opportunities. With all of these options available, your business should be differentiated from competitors. Differentiation can come in many forms, including the actual product or service, or even a distinct marketing strategy.

3. Is my business teachable?

Successful franchises rely heavily on systemization. Therefore, it will be critical that you can teach your systems to others. Complex concepts may pose a challenge when it comes to teaching other people how to run your concept.

4. Is my business transferrable?

This question refers to how or if your concept can be adapted to other markets. First, consider if your business would be as successful in another geographic location. For example, a restaurant concept may not work as well across different geographic locations due to variations in consumer preferences. Second, your business may not be transferrable if it is only working because of the unique abilities of an employee or location. Think “universal” and “simple” – your business should be able to achieve success in a variety of markets and be relatively simple to run.

5. Do I have capital?

Although we mentioned earlier that franchising is a “lower-cost” method of expanding your business, you will still need some capital to get your franchise program off the ground. Consider the fact that as a new franchisor, you will need capital to develop legal documents, manuals, training programs, and more. Also, you will need to invest in marketing in order to generate franchise leads.

If your business meets some of these basic criteria, it may be a good candidate for franchising.

Call: 1-805-324-7001 and request a consultation.

1. Is my business
credible?

2. Is my business
unique?

3. Is my business
teachable?

4. Is my business
transferrable?

5. Do I have
capital?