Do You Know The Right Time To Franchise Your Business?
So if you have customers lining up at your store clamouring to avail your products/services and you are making huge profits, it is natural to think that your business is successful and now you want to expand it. However, the business which is successful in one location may fail to prove it in another or nationwide.
Franchising is the best option for expanding a business, but not all businesses make good franchises. There are a few essential conditions that any business hoping to jump into franchising needs to have covered.
Patience is the key here; wait for the perfect time to replicate your business model. How to know if it’s the right time? Here are some points to consider.
Demand for Your Business
One of the good signs which will indicate the right time for franchising your business is when potential franchisees start reaching out to you. People will start asking if you are accepting franchise applications, whether you could offer them a franchise, or if you’ll be franchising in the future. When there will be interest from third parties to invest in your business, is one of the green flags to consider replicating your business model.
Mohamed Sohail Alimohamed, Director of Chaiiwala, said, “After launching our first store, we started getting an influx of franchise inquiries from people saying we want to take this to London, Birmingham, Manchester etc. So after researching well about franchising for about six months, we introduced our first franchise store”
Thus, having potential franchisees already in the pipeline can help justify the outlay of cash required to set up a franchise operation.
You Have Sufficient Capital
If you are thinking that franchising is a “no-cost” expansion strategy, then it’s time to burst that bubble. Franchising is definitely a low-cost means of expansion; it is not a “no cost” strategy.
This is because, even if the prospective franchisee will invest in the business, as a franchisor you will have to develop legal documents, manuals, training programs and not to mention marketing budget for franchise lead generation; and all this will required capital. If you do not have the budget for executing all these tasks, then it’s definitely not the right time for you to franchise your business.
Sales Are Steady
The franchise isn’t a means to turn your business around. If you are still struggling to keep your profits steady, franchising it will not exhibit a positive result.
So, if you are thinking of dipping your feet into franchising waters make sure your sales are steady. Introspect into your business growth; how the sales have been for the past few years. If there’s any dip in the profit share, your business model is not ready for franchising.
Can you Clone it
Franchising is all about replicating a successful business model. Make sure your business structure has a strong system and processes, which can be replicated easily.
For instance, if you own a fast food business, once you decide to start franchising, you’re no longer preparing then yourself. Instead, you are now running a joint which will serve fast-food. You will be required to teach your prospective franchise on how to prepare the food, which locations are preferable. So make sure that your business model is easily understandable and can be cloned.