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Franchising An Existing Business: How to Balance Calculated Risk with Strategic Planning
Transitioning from owning an independent business to being a franchisor is a huge step. We’ve interviewed an expert who has successfully made that transition to provide you some insight.
Sam Tejada, a former paramedic and retired firefighter who founded and built his own company, has successfully navigated the journey of franchising an existing business. He started Liquivida, a wellness concept, in 2014 and has since franchised his business, growing the brand to 21 locations across the world.
While there are some obvious benefits to franchising an existing business, 1851 Franchise spoke with Tejada about how to balance the risk involved with strategic planning to minimize that risk.
Gauging Readiness
To start, Tejada emphasized the importance of understanding whether there is existing interest and demand for the business. In other words: is it ready for franchising?
"You'll know it’s time to consider franchising your business because you'll start having people seek out your business and ask questions about your business," he said.
According to Tejada, the critical indicator for franchise readiness is not so much the interest from prospective franchisees, but more so the demand from consumers. "When you see a demand for it, you know that there's going to be a demand in other demographics," he said.
Duplicating Processes
Moving from just being interested in franchising to being fully prepared for it means making your operational processes more efficient. You'll need to examine all your current processes because they must be scalable for larger operations and simple enough to replicate across different locations.
"You're ready to franchise at the point of time that you can really duplicate your business," said Tejada. “Having those types of systems and processes that allow you to work on the business versus having to work in the business.”
This seamless duplication requires various tools for consistent training, automation and operational efficiency so that as a franchisor, you can step back and trust the systems.
Step One: Understanding the Legalities
Once you have decided that franchising your business makes sense, you’ll want to seek legal advice, as there are many legalities involved in this process. These legalities involve substantial expenses, including registrations and reviews by franchise attorneys. Tejada emphasized the need for clear documentation and expert advice in this area.
"You want to have someone who can be your coach and guide you through that process, and I think the attorney is the first good step," said Tejada.
Start As You Mean To Go On
If you want to generate leads of potential franchisee candidates, you need to show them who you are and what you offer. This means the systems and processes need to be in place from the word “go.”
In the modern digital age we live in, for example, your development website might very well be the first port of call for potential franchisees. Make sure you provide them with the information they need to stay interested in pursuing your brand.
"Educational information is always one of the most important things to offer," Tejada said.
This education extends not only to potential franchisees but also to the consumer. Both business owners and customers need to see the value in your brand and understand what you can offer them.
Tejada recommended consistent and varied content creation, including blog writing, participation in podcasts and social media posts keeps consumers engaged and educates franchise owners. Content creation in all forms acts as marketing for your brand, and Tejada recommends branching out as far and wide as possible. He himself has even written his own book backed by his expertise gained in working with his brand: How to Win in Modern Wellness.
Taking a Leap of Faith
While Tejada noted the potential of franchising as a great multiplier of revenue, he also acknowledged and cautioned against several challenges, such as a slight loss of control over the brand or the difficulty in ensuring franchisees adhere to standard operating procedures and guidelines.
Regardless of the steps you take and the research you perform, franchising an existing business will always include an element of risk.
“It's one of those things where you're going to have to take a calculated risk," said Tejada.
This calculated risk involves an understanding of the financial commitments, time investment and the challenges of maintaining control over the brand while accommodating diverse franchisee perspectives. While Tejada advised that you do all you can to prepare for the transition, he also compared the decision to franchise to many of life’s major milestones; sometimes you just have to jump and hope for the best.
"You're never fully ready,” he said. “You just have to do it and deal with it because it's a learning process."
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