How to Turn Your Business into a Franchise? First determine whether your business could succeed as one
Wondering if your business is ready to be franchised? When thinking about franchising your business, there are a few key criteria to consider. Working with a franchise consultant can help you determine if: 1) you offer a superior product or service, 2) your concept is easy to share and teach, 3) your concept is easy to replicate across a diverse set of locations, and 4) your concept is not one that would encounter too many legal or regulatory obstacles.
1. Do you offer a superior product or service?
A successful franchise starts with a superior product or service. In addition to attracting customers, your product or service should also attract potential franchisees.
Demonstrating your business’ profitability and credibility is especially important for obtaining buyers. First, consider the success of your product or service. Has it been proven over time? If so, your business might work as a great prototype for franchisees. Keep in mind, however, that a franchise operation needs to be even more profitable than a regular business, as franchisees will have to pay an initial investment fee and royalties while still earning enough income.
Strong franchises often strike a balance between originality and wide appeal. Most experts recommend a familiar product or service with a unique “twist” that makes it unique in the marketplace. For example, a new style of popular food or a one-of-a-kind patented technology make for especially good franchises. These kinds of concepts stand out to consumers and appeal to potential franchisees’ imaginations. When thinking about franchising your business, start considering ways to add some pizzazz to your product or service.
2. Is your concept easy to share and teach?
If you have decided that your product or service is profitable and distinctive, you next have to consider if your concept is easy to teach to franchisees and their employees in a relatively short amount of time. While some individual businesses are profitable, they may rely on the constant involvement or “personal touch” of the owner. If this is the case for your business, you can make it franchise-ready by hiring employees and training them in your methods.
When considering a franchise, be sure that your concept can be explained to other people in a way that they can grasp and reproduce in a consistent manner. This can be done with most businesses, but you may need to get your process down on paper. Ultimately, you can solidify these requirements in training manuals, procedure outlines, handbooks, and training programs for each level of your franchise operation.
3. Is your concept easy to replicate across a diverse set of locations?
The next step is to consider if the concept can be replicated in a variety of locations by a diverse group of people. For instance, if your business is completely built around providing tours to a specific geographical location, it will take some work to replicate it elsewhere. However, even many successful tour franchises begin locally.
Other locational variables that can affect franchisability include local laws and ordinances or weather conditions (for instance, if you run a solar-panel business). Local tastes, cultural variations, and market saturation can also influence franchisability. Be sure to conduct market research about demand for your product or service rather than relying solely on your instincts when considering its appeal for consumers in other regions. By doing this research, you will be able to determine where your franchise will succeed.
4. Is your concept not one that would encounter too many legal or regulatory obstacles?
While they can be addressed through careful planning and consideration, both national and local laws and ordinances might make some businesses more challenging to franchise than others. Transworld’s franchise consultants are on your side and are there to help you navigate through some of these potential issues to keep them from becoming problems. For example, if you plan to run a fast food model franchise, it is good to be aware that minimum wage laws and other labor laws vary in different states and could present an impediment to potential franchisees.
Some franchisable businesses such as massage parlors, hair salons, child and elder care facilities, and pharmacies require licensed employees. Furthermore, licensing procedures may vary from state to state. Lawn and pool care services may be subject to environmental laws and regulations. Other potential barriers to franchise operations can occur in industries where insurance is involved; not only can insurance policies present a high burden for franchisees in general, but insurance requirements may also be stronger at the state or local level. Again, as long as you are aware of these details and continue working closely with your advisor, it should not become an obstacle.
Franchises provide a wonderful opportunity to be successful by maximizing on the opportunities that come with being part of a larger name. Although franchising can present some challenges, it also has several inherent advantages that can’t be overlooked such as the fact that being part of larger brand can help your business grow more rapidly. And again, with the Transworld team to assist you, there is nothing to fret about. These criteria provide an effective way into the franchise process. There’s no need to worry if your business does not meet all of these requirements at the moment; instead, you can use these questions to make any changes to your business before franchising. If you think your business is ready for franchising or if you would like help determining your business’s franchisability, contact Transworld’s franchise consultants.