Every year seems to go faster than the one before, and we are, yet again, at the end of a calendar year. While many of us are looking forward to enjoying some time with family and ringing in the New Year, this is also the perfect time of year for business owners to evaluate their company and decide if 2019 is the year they’ll decide to franchise their business.
Franchising isn’t for everyone. Making that leap from independently-owned to a franchise concept can lead to substantial growth and enhanced success, but it also comes with hard work, sacrifice and risk. When you franchise, you enter a whole different industry. You may think you’re in the pizza business – but once you franchise, you’re running a franchise business where you sell pizza.
In the simplest terms, if your business has declined in revenue, your processes aren’t efficient and effective or your model cannot be easily replicated – stop here.
You’re not ready to franchise.
But for those of you who have steadily increasing revenue, solid processes and an easily replicated model, as you are taking end-of-year stock of where your business stands and contemplating franchising in the coming year, I offer these five main areas to really explore and evaluate while making that decision.
1. Do I Have the Right People?
Any successful business owner knows that a product or a service can only take you so far – having the right human capital is vital to business success. It’s even more important once you decide to franchise, when operators will be taking your model and bringing it to new markets and exposing it to a wider market of customers.
The team that you put in place should be ready and excited for the possibilities that franchising will bring. Personally, you need to make sure that you’re all-in on the adjusted role you will need to take on in order to make your franchising foray a success.
You should make sure that your team understands that franchisees who will be entering your system are, in many cases, investing their life savings into your vision. That will change the dynamic of their jobs since it will require more responsibility to either run the corporate operations more heavily while you focus on franchising or they may need to play a role in getting the franchise opportunity off the ground.
You should make sure that they understand that with franchising comes increased opportunities since your entire company’s business model will need to grow. I’ve worked with many brands whose base team from the very first location moves up to play a larger role on the corporate team supporting those franchisees who enter the system.
2. Do I Have the Right Model and Processes in Place?
Your model and your processes should not exist solely within your head. They need to be documented, and documented thoroughly in an easy-to-follow way. If you haven’t spent the time to create your franchising blueprint (or at least have created a model that will be easy to create a blueprint for others to follow) then you aren’t ready to franchise.
The key to franchising is creating a business that can be easily replicated by franchisees that fit your culture, so you need to have created a business model that you can walk away from and know that it can still be successful without your presence. If you’re the type that is constantly working in your business instead of on it, then franchising is going to be a tough route for you.
Several times, I’ve talked to people who say that they’re ready to franchise their business. But when I give them a day to meet they’ll say, “Oh, I can’t that day, I need to be in the kitchen.” I’ll propose another day and they’ll say, “That won’t work. I need to open that morning.” It’s an easy test for me to assess their franchise readiness. In this case, I would typically let them know that the timing isn’t right for them to franchise.
3. Have I Mastered Operations in My Existing Business?
If the product and your people are great but your operations are not, you won’t go far as a franchise. Part of having a model and processes ready for franchising is that they need to be simple enough that your own location or locations are operating at a level that every experience is consistently great.
Just like you wouldn’t want to invite guests into your home if it was a mess, you don’t want to invite others to invest in your brand if it’s a mess. In order to attract quality franchisees, your house needs to be in order and if prospects come to experience the opportunity that you’re presenting, they should leave confident in the ability to duplicate the same great experience. When you decide to franchise, you are opening your business up for meticulous examination by others and to evaluate. You need to be willing and excited to show off your model, prepared to answer any criticisms with operational excellence.
4. Are You Financially Fit?
Money talks. When you are entering the very crowded and highly competitive franchise world, most potential prospects are going to want to know immediately, “How much can I make?” If you don’t have a good financial story to tell, you won’t get the chance to brag about your people, your processes or your rock solid operations.
Do you have a good handle on the economics of your business? Every business is different and what is a strong bottom line for a home-based business is going to differ from a restaurant, or a service based business, or a retail concept. So, it’s important to not only understand the performance of your business, but how that aligns and stacks up to other concepts that will be your competition within the franchising world. You need to be able to show that you’ve continuously grow in sales, that it’s been established and successful. The economies of the business need to make sense.
5. Are You Personally Prepared – Both Physically and Mentally?
One of the most common things I’ve seen over my decades in the franchise industry is an excited entrepreneur ready to take on the world and become the next household name in franchising – and then very quickly realizing that franchising the business requires a tremendous personal commitment. Not just financially, but also your personal time, energy and focus.
You are taking on a whole new venture. You’ve established a successful business, but in order to expand and get others to buy in to your vision and help you grow, you will need to be marketing the business, networking at events, traveling around the country, working longer days and having to be “on” more.
It can be physically and mentally exhausting.
If you aren’t prepared – and if you haven’t prepared your family and loved ones – this stress can take away from the enjoyment of franchising your business.
I can’t say it enough. Franchising is not for everybody. You need to be able to invest the time and money to grow the system and take care of these people who are investing their savings into your brand and your vision. You need to have the fortitude to understand that very few businesses see explosive growth immediately. It usually takes years, and can even take up to a decade, to really see growth beyond the “emerging” phase.