Franchising as a business model spans a wide range of industries and sectors, from fast food, hospitality and retail, to children’s activities, dog hotels, travel and pest control. In fact, there are now so many weird and wonderful franchise opportunities that it would be easy to assume that any business can be successfully franchised.
But while for many brands franchising can be a great route to expansion, it is certainly not an automatic path to success, nor is it the best and most appropriate course of action for every business. These 6 reasons are certainly not exhaustive, but they are some key points to consider when considering whether franchising is right for you and your business.
The business cannot be easily replicated.
A fundamental concept of franchising is that the franchisee acquires from the franchisor the right to operate under its brand and sell its goods or services using the business model developed in different territories or locations. Therefore, the original business concept must be simple enough to be replicated and for a franchisee to be easily and quickly trained to deliver the franchise brand offering. It is also important that the concept can be successfully translated to other locations: a business whose success depends on its specific geographic location, a niche customer demand in a particular area, or a product that is only available in a limited field is unlikely to be successful. should be franchised
The business is not financially sound.
The franchise should definitely not be used as a vehicle to try to save a sinking ship. Establishing a franchise brand is not only an expensive and lengthy process, but you cannot ask and expect others to invest in your brand and business if you do not have a track record of financial success.
It’s crucial to have a realistic approach to the math of franchising a business. As stated above, franchising can be an expensive process in the first place. You need to have a clear idea of how much it will cost to replicate the business model and set it up for each new franchisee, as well as ongoing training and support. If that cost is going to run into the millions, then you will most likely face huge financial hurdles in attracting franchisees, particularly without a track record of success to back it up.
The sector does not have longevity
For any franchisee looking to invest their hard-earned money in a franchise business, you’ll want to feel confident that it’s a business venture that isn’t going to be just a lightning bolt. Is what you offer going to stay the course or is it something that is likely to go out of style?
You will fight to let go of the reins
This is a real problem for many aspiring franchisors: their business is a brainchild, a concept that they birthed and nurtured to grow. As a franchisor, you must be able to step back and trust your franchisees to deliver your much-loved business model. Not only that, but you also have to be able and prepared to make some tough decisions if things don’t go as planned. The right mindset is crucial and not all personality types will suit the role of a franchisor.
The business does not have enough experience behind
As a franchisor, you (and your operational team) will be the point of reference for advice and support, the sounding board for your franchisees, and also the place they go when things go wrong. Rest assured, you have the experience and track record behind you to be able to provide that to your franchisees. Otherwise, you will most likely end up with an unhappy franchise network, which in turn can be stressful and incredibly damaging to your brand.
There are many factors to consider when weighing whether franchising is the right course of action for you and your business, and more importantly, whether you are truly fit for the role of franchisor.
