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How Do You Know When Your Business Is Ready to Franchise?

Brands will need to establish a repeatable business model, a projectable revenue stream and a commitment to franchisee partnerships all before franchising their business.

By Justin Wick1851 Franchise Contributor
Updated 8:08AM 11/10/21

If a brand wants to begin franchising, they will have to win over prospective franchisees to buy into the brand. Doing so takes a lot more than a smile. If a brand is looking to franchise  at a quick pace, they will have to prove their business model far beyond initial meetings with investors.

Simply put: A brand is likely prepared for franchising if it can ethically convince a team of committed, rational franchisees to go along for the ride.

A key facet of franchise brands is an ability to be replicated across multiple units. This is best accomplished with a proven model, and a well-represented Franchise Disclosure Document can be a great starting point to ensure all angles of franchising are covered. A comprehensive FDD is best monitored by a legal expert, and a franchise attorney can craft a wholesome document far better than an independent business owner.

This can pay dividends down the road, as one legal misstep could derail the entire operation of an emerging brand. If a brand is serious about starting a franchise model, they will likely be serious about pursuing some (often expensive) legal consultation.

A franchise will be forced to determine how much freedom they will give franchisees, which is another key facet in convincing prospective investors to buy into franchising. Independent businesses are allowed to operate without a playbook in many respects, while a franchise unit will often require following a standard set by the franchisor. This isn’t to say franchisees can’t take on independent liberties, but a brand must prepare for the extent of that freedom before handing the keys over to the franchisee.

It would be outlandish to assume all emerging brands were flawless in the early stages of franchising, so a simple willingness to adapt is another key ability toward getting a franchise started. If a brand can prove this on a small-scale level, they are further prepared to do it with larger operations.