Franchising is an excellent strategy to expand a business further. Some companies can rapidly expand through this approach, and as a result, their brand grows exponentially.
So whether you’re offering a lucrative franchise opportunity for a restaurant or coffee shop business, how do you know if you’re ready for franchising? Below are a few indicators to look out for.
Beyond proof of concept
Business ideas are just that. Ideas. Go-to-market strategies and revenue models have yet to be proven. Fledgling companies without strong results to show for are not ready for franchising.
It’s a different case for companies that already have a minimum viable product or working prototype that is commercially viable. If you demonstrate strong and consistent results in its first few years, then this boosts your chances of successfully franchising the business.
With a tried and tested business model, it can be relatively easier to pitch to potential franchisees who might be interested in signing up.
A replicable model
It’s one thing to prove the model, and it’s a different thing to reproduce the same results in different locations, with different managers.
At the core of any good franchise is replicability. Without it, you’ll have a difficult time guaranteeing product quality and ensuring brand consistency — to name a few issues.
Start by reviewing the entire business. Find areas or aspects of the model that need to be simplified. However, when tweaking complex processes, make sure that you don’t sacrifice the quality of your products or services.
Then, once you’ve smoothed things out, document the entire management and delivery process. The result is that a franchisee manual that codifies all appropriate steps and guidelines. This helps franchisees know which areas of the business they can innovate further and which ones are best left as is.
Strong relationship building skills
However, documents and codified processes can only do so much in helping franchisees be successful. That’s where relationship building comes in — to motivate and set the right tone.
As the franchisor, you should be prepared to communicate what you expect from your franchisees effectively. Also, you should inspire them to their best and show them that you’re invested in their success — not just the overall success of the franchise.
To complete your relationship-building efforts, you can also sponsor and organize routine training and seminars. These are essential venues to impart knowledge, insights, and best practices that will ultimately improve.
All in all, founders and business owners that excel in relationship building can create a cohesive franchise.
Availability of capital
Lastly, you need to consider if you have sufficient capital to expand through franchising. Codifying processes, creating marketing collateral, and securing necessary legal documents — among other things — require a considerable amount of money.
While it’s true that franchising has minimum capital expenditure, you still need some serious cash to execute successfully.
Your capital requirements will largely depend on the type of business you have and your initial goals. You also need to take into account the industry and the competition.
If you can find suitable financing options or other ways to secure the necessary capital, then your business might be ready to head into franchising.
