Franchising is a technique that many companies have adopted to expand their business and increase their profitability. However, not every business can be franchised as there are many aspects to look into before you determine whether this is a suitable business opportunity for you. The first thing to consider is your reasons for franchising. If your main goal is to expand your business rapidly and achieve global recognition and popularity, franchising is the way to go. Products and services that can be franchised are those that are established and have shown significant growth and success over the years for them to have a substantial market niche. For you to successfully franchise your business, you should first assess the following issues.
Evaluating The Readiness Of Your Business
Readiness goes beyond looking at sales records and profitability. What matters is having a good business concept that can easily be emulated by others and operated successfully. The financial record of your business is also important as it is not practical to franchise a business that is struggling to breakeven or one that is reporting losses. You must also do extensive market research to confirm that your product or service has significant demand across the country.
Understand The Legal Requirements
The state requires that you submit a comprehensive Franchise Disclosure Agreement, which provides detailed information about your business. The information disclosed include; audited financial statements, outlay of the management structure and the intended strategy to be applied in franchising.
Vet the Franchisees
Just because someone wishes to open a franchise using your brand does not mean that you should trust them immediately and give them the go ahead. A franchisee will be a representative of your company; meaning that, any mistakes made will reflect negatively on the parent company as well. You should therefore assess their credibility, professionalism, reliability and commitment to making the franchise reputable and successful.
Be Clear On The Restrictions
You must have proper and specific requirements for hiring, firing, training, freedoms allowed and other practices to be carried out. As much as the franchisee decides how to manage the business, there must be clear guidelines on how you expect operations to be handled.
Always Provide Support
As the franchisor, your franchisees need your help and support, especially during the initial stages of operation. It takes time to understand the production process, distribution and marketing strategies. To ensure that they run a profitable venture that you will also benefit from, provide all the financial, technical and strategic support needed.
Source: The Franchise Company