When to franchise your business?
Are you considering franchising your business and wondering when to franchise your business? Before you consider the below indicators first you need to look closely at your own operation. Ideally you need a minimum of 3 years trading successfully and profitably before you franchise a business. There are lot’s of other considerations such as local markets, transferrability of skills etc but the first question is “are you profitable and have you been for 2-3 years?” If you cannot answer yes to this question then you probably are not ready to franchise your business.
Assuming you have a already successful business please find as below some of the common indicators of when to franchise your business;
- New product, concept, fast growth required – Let’s say you have a great new innovative product. You have market this or similar products and have negiotated an exclusive, short-term agreement with a manufacturer. To grab as much market share as possible you will need investment and people on the ground to sell the product and, if successful franchising can provide rapid growth for a small business.
- Capital restrictions – You may have a great business but expansion requires a lot of capital, iniability to raise capital slows down growth for many small businesses. Franchising provides a fast way to raise capital through your Franchisees ( the people that invest in your franchise ) to allow rapid growth with the capital restrictions.
- Staff – Growing a national & international business organically you will need staff. Staff and possibly lot’s of remote staff can cause serious cash flow and managment issues for growing small businesses. With franchising a business in addition to not having the payroll cost the investors or Franchisee’s have a significant financial investment in your business probably for a min of 5 years so usually have more commitment and motivation for the business to success in their geographic areas and require less day to day management.
To find out more about when to franchise a business why not book a free intial consultation with one of our franchising experts by completing the form below;