Deciding whether or not to franchise is a big decision, one that could mean the success or failure of your business. It’s easy to get caught up in the prospect of a booming business where everyone knows your name. But the reality is that you have to tread lightly when thinking about franchising; so take a look at the top questions to keep in mind before taking the plunge.
1. Do you have the business plan to make other stores successful? Franchising is all about being able to replicate the success you found, and if you only found success by fluke, think long and hard about how you’re going to give others the key.
2. Is your primary business running smoothly? If you’re having trouble keeping up with one business, be wary about franchising. While the other stores are someone else’s problem to deal with, ultimately you’ll be the one they run to when they hit a snag.
3. Do your customers want or need another store? Consider getting feedback from your current customer base to see if another store would be beneficial to them. See if they would be willing to recommend your services to another person or if they would like a more convenient location.
4. Where do you want to see your business? Location matters a lot when franchising, and although your franchisee will be the one most concerned with it, don’t try to set them up for failure. If someone is thinking of putting your business in a place it won’t do well, work with them to place it somewhere more beneficial. Moving into new states or countries can be very challenging.
5. Is your business well-known enough to franchise? A big benefit of buying a franchise is that your brand is already recognizable, so people have less to worry about when marketing. If no one knows your business, your franchisee may as well open their own business.
6. Is your business successful enough that someone can make money after royalties? No one is going to want to buy into your franchise if they aren’t going to see a profit. If they aren’t going to see a profit after paying you for use of your name, they might as well open something up with a name they get to choose.
7. Can you give up micro managing? When you decide to franchise, your responsibilities aren’t going to be running your business; someone else will take care of that for you. Instead, you’ll be running a system of businesses, so are you able to think big picture?
8. Is your business unique? If you own a pizza chain that sells pizza that’s exactly like every other pizza parlor in the area, why would anyone want to buy into your franchise? Your business has to have something to offer that others can’t in order to be successful.
9. Do you enjoy what you do at your business? If you franchise, you’ll no longer be working with your hands in the excitement. So if you cook for your own restaurant, be prepared to give that responsibility to someone else.
10. Would expansion be beneficial to you? If your business is successful because it offers something in your geographic region that no one else does, that’s wonderful. But if that type of business exists elsewhere, expansion might not help that much.
Consider speaking to someone who has already franchised their business before making any decisions to get a better understanding of what you’re in for. Use this as a checklist of the top ten things to consider before you franchise.