If you look around you, many of the businesses that you see, or indeed use on a daily basis, are very likely to be part of a franchised network, they might well be independently run with maybe a husband and wife or father and son perhaps, but behind the scenes there could be also be a franchisor who have issued the ‘rights granted’ for that couple to trade as the brand name you see above the door.
Franchising is definitely not just reserved for the household names that you see every day though, indeed, if you own an independent business, and it is performing very well at a local level, then that is very good reason to considering franchising your business and in turn you could be the franchisor yourself and potentially have franchisees operate underneath you in a matter of a few months!
Franchising Is Simply One Business Format And One Of The Most Successful Ways To Grow
Should you franchise your business though? Well, that’s another part to this story…
Having a great business model is certainly a significant step to the merits of franchising, but there are other factors too, and this is where assistance via a franchising consultant can give you some further clarity, guidance and support, any worthwhile consultant will be thinking about the viability of recruiting franchisees for you, so it is usually not in their best interest to franchise the business just for the purposes of doing so, so the chances are that if one decides to assist you, they also believe in the proposition itself!
If You Own A Business, Most Likely You Can Franchise It!
One of the benefits of franchising your business is that you are able to launch your brand on a national scale, potentially even internationally but the benefit in franchising is that it will be with the assistance of franchisees who will pay you upfront for the benefit of your knowledge, know-how, expertise, and ongoing assistance, so this does need some careful thought on your part, have a long and hard think about whether you want to expand something that you might have actually created yourself because some will fear about the control aspects in their business, franchising does give you as much control over it, but there will still be an ideology in your mind, as you build, that the business is quite far removed from what you set it up to be.
It is not a one-way street either, because in all probability you will help someone (a franchisee) launch their own business without the risks of starting from scratch, it is for this very reason that they will pay you an upfront fee, they will see it that you have already done most of the hard work and they will pay you to get ahead from the outset.
Franchise Your Business For A Profitable Exit!
During the current pandemic, food based businesses have been very resilient and they have attracted the attention of individuals to either buy into that system as a franchise or indeed purchase the business to then get some scale and go about franchising it, however, virtually any sector can be taken through this format, have a look around you and whether it is your own business or one that you use on a regular basis, and think to yourself whether that business could be picked up and located in a different area and still be able to operate in a very similar way, potentially serving that local market, and hey presto, that is franchising for you!
It is also fair to say though that franchising is no ‘get rich scheme’ ask any established franchisor, and just like building any new business, there are challenges too, there are elements to think about such as marketing budgets to generate franchisee interest, whilst in turn beefing up the head office team so that franchisees can see that there is an operational set-up to support them, then there are cashflow issues while you are waiting for incoming fees, you will also need to think about the long term implications of supporting franchisees for a defined term, which can often be ten year and beyond, however, overcome all of this and the rewards are there, it is again, by far, one of the better ways to grow a business in the medium to long term and there is a very real possibility of a successful profitable exit as the business valuation can be so much more reliant than the standard ways of 2-3x net profit figures that businesses are valued at historically, maybe this area is a topic for another article later on in the year!
As we move into what feels more like an intense period in our history, yet still relatively short at a year or so, and with a bit of luck, we are slowly coming out of the current pandemic, franchising has still remained incredibly resilient, there are so many more franchisee enquiries than at any moment in our history, as well as businesses looking to diversify into franchising as a way to generate further growth as franchisors, please do, at the very least, look into this option, there are many consultants out there that will offer an initial exploratory chat to check you and the business potential out, if I had my way, most businesses out there would have a franchise element to it, you could carry on doing what you are doing as a company owned site and then franchise other parts out, it might just be the way to do things moving forwards!
This post was written by Richard Pakey, Regional Director at Lime Licensing Group.