People often ask me, “Should I franchise my business – is it right for me?”
The first thing I’d say is if you have a business that is only slightly profitable after royalties then do not franchise, as it will be a world of pain! Franchising only works if you have a proven profitable model that is transferable and has growth potential.
So let’s assume your business is making money – what are the benefits of franchising?
- Claim your territory. If you have a good concept that is busting to grow and you do not grow it, then someone else will! Don’t let anyone steal your hard work right out from under you.
- People: The number one positive if you do franchise is that you get likeminded people involved in your business who also have ownership. The good franchises really tap into this great resource to grow their business.
- Capital: Another positive is that you can grow your business with limited capital outlay.
- Marketing: Franchises pool their resources so that they can market effectively as a group. Franchising is also great way to get market penetration which in itself is a great marketing tool.
- Buying Power: With mass orders come great savings. Many businesses need to get to a certain size before they are big enough to make decent money. With a franchise, even though you have one store, you leverage the group and you immediately have great buying power.
So if your business is straining to grow – do the sums. Franchising just might be the perfect solution for you.
Stay tuned for part 2 of this article discussing the four major pitfalls of franchising (and what to do about them).