As the end of the year approaches, you are likely in a reflective mood about the progress your business has made as well as its potential future. Whether it is fueled by phenomenal growth and success or a desire to further challenge yourself, franchising your business can seem like the next logical step. Before you go any further, though you should consider a few key questions to help you determine if this direction is the right one for you — and your business.
1. Is Your Business Franchise-Ready?
Some important considerations that need to be explored before franchising your business include determining if your business is diverse when compared to its competitors. The ability to highlight its unique attributes is key to making franchising a success. While you might not have set up your business framework with the intention of franchising, can it be modified to be franchisee-friendly? Is it able to be effectively duplicated? Any franchisees will need be able to turn a sufficient amount of profit — even after paying franchising fees — to make the venture worthwhile for potential frachisees.
2. Do You Have the Necessary Capital?
Franchising is an attractive way of expanding your business that can be more cost-effective and less labor-intensive than opening another location. This isn’t to say that franchising is inexpensive, though because it is not. Of course, your actual costs are going to be difficult to pin down to the penny, but expect to shell out at least $200,000 for a rollout of your franchise that is moderately aggressive in growth expectations and marketing. In addition to marketing, you’ll have to figure in costs for development of the business, as well as legal guidance and personnel.
3. Are You Emotionally Prepared?
As a business owner, you are used to taking risks and seeing the fruits of your labor. Franchising can challenge the nerves of even the most adventurous individual, though. You need to be prepared to invest large sums of capital without seeing discernable results for many months. More than other types of business frameworks, a franchise needs to have a very clear vision and focus to be a success. You also need the drive, determination and desire to keep your long-term goals in mind. Nursing a franchise from the ground up takes enormous amounts of all three — plus the time to see your efforts come to fruition.