Are You Ready to Franchise? Key Factors to Assess Your Business Potential

A question I'm commonly asked is how to know if you're ready to franchise. This isn't a difficult question to answer, but it will be different for every business owner. In most cases, it's simply a matter of the business owner deciding to scale and then moving forward. Change is always uncomfortable, but staying the same can be worse.

If your current model is no longer working for the business and you're regularly taking one step forward and two steps back, it's time to consider franchising. A common misconception is that you must have multiple branches or locations operating for a certain period to be ready to franchise. This is simply not the case. Franchising also doesn't require setting up an expensive head office structure overnight. If you can train and support employees, then you can train and support franchise partners who actually require far less day-to-day supervision. In fact, well-trained franchisees will mostly be independent within the first six months.

If you've been following me for any length of time, you will have heard me talk about the four elements that your business should have for franchising. This is based on what we know franchisees are looking for when they are assessing an opportunity:

  1. Consistent Demand: Is there consistent demand for your product or service?
  2. Profitability: Is the model profitable? Can franchisees get a return on investment within two to three years? Generally, they should be able to draw an income from the business that exceeds what they could earn as an employee within the same or similar industry doing the same type of work.
  3. Effective Systems and Processes: Have you developed effective systems and processes for operating your business? These don't have to be documented before you start franchising, but they should be in place.
  4. Franchisor Commitment: Is the franchisor committed to helping franchise partners succeed? Your franchisees will want to know that you're as invested in their success as you are in your own.

You don't need to be a well-known brand to attract franchisees. We work with small businesses that often aren't well known outside of their operating area, yet collectively, our clients have sold around 80 franchises in the past two years. There are often more advantages for franchisees to join an emerging franchise system over a large one. Franchisees aren't prioritising big brands in their decision-making process. They are more compelled by the franchise relationship and the franchisor's enthusiasm and commitment to the overall business and its success.

Another advantage is the focus on personalised support, as smaller networks usually provide more mentorship to their franchisees. There's often a greater willingness to collaborate on key strategies and policies. It's usually the lack of this in a larger franchise system that causes discontentment across the network. When franchise partners have more access to the franchisor and real mentorship, it can make for a more meaningful journey into self-employment rather than just following systems.