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Are you a business owner considering expanding your success by franchising? There's a lot to consider before taking such an important step, and it can be quite confusing knowing where to start. Consequently, questions arise such as "Can I franchise my business" and "How do I start to franchise my business".

Download Now: What is Franchising?

In this article we will explain a number of factors that you need to take into account while exploring the opportunity of franchising your business.

We will delve into understanding branding, systems and consistency as foundational elements required when franchising.

But first we look at what franchising is and how it can help your business grow.

What is franchising?

Can I franchise my business?

 

What is Franchising?

Franchising is a business model where one party (the franchisor) grants another party (the franchisee) the right to use their business concept, trademark and operating systems in exchange for fees and royalties.

 

What is Franchising?

 

Franchising can provide significant benefits to business owners looking to expand their brand. By franchising you allow other people to open new locations and operate your business model, reducing your financial and managerial burden.

For the franchisor, granting the rights to another individual or company to operate a business using its established brand, systems, and intellectual property can open up a world of possibilities. When working well franchising allows the franchisor to expand their brand without the need for significant capital investment. Instead, the franchisee takes on the responsibility of financing and operating individual franchise units, ultimately shouldering the financial risks. This arrangement not only minimizes the franchisor's financial burden but can also provide a stream of revenue in the form of fees or royalties paid by the franchisee.

On the other hand, franchisees can benefit from the established brand recognition and customer base that the franchisor has already built. By operating under a well-known brand name, franchisees can tap into a loyal customer following and enjoy a certain level of credibility and trust from the start. Moreover, the franchisor provides ongoing support and expertise to contribute to the success of each franchise unit. This support can include comprehensive training programs, marketing strategies, and operational guidance, all of which contribute to the franchisee's growth and profitability.

One of the key aspects of franchising is the adherence to specific operating procedures and quality standards set by the franchisor. This ensures consistency across all franchise locations, regardless of their geographical locations. Customers can expect the same level of product or service quality no matter which franchise they visit, thereby enhancing the overall brand reputation and customer experience.

Franchising transcends various industries, with fast food restaurants, retail stores, hotels, and automotive services being just a few examples. This versatility makes it an attractive option for aspiring entrepreneurs looking to start their own business. By leveraging an established brand and a proven business model, they can mitigate some of the risks associated with starting from scratch and increase their chances of long-term success.

 

Can I Franchise my business?

When answering the question, "Can I franchise my business?" it's important to carefully consider factors that contribute to a successful franchise.

Perhaps the most crucial factor in franchising your business is having a strong brand, one that resonates with customers and sets you apart from competitors in the market. In addition to a powerful brand, take a look at your business systems. Do you have processes and procedures in place that are replicable and scalable? Finally, consistency in your product or service is paramount when franchising your business. Customers expect the same level of quality and service no matter which location they visit. By evaluating these elements, you can start to determine whether or not your business is ready for franchising.

4 Tips to Building a Successful Franchise Business

1 - Do YOU have a strong brand?

In today's competitive market, having a strong brand is important for any business looking to stand out. Your brand tells the story of who you are and what you have to offer, and sets you apart from your competitors.

When you franchise your business, your brand becomes even more important, as franchisees will be investing in it to attract and retain customers. This means that it's crucial to have a well-defined brand that speaks to your target audience and distinguishes your products or services as unique.

By focusing on your brand, you can build a strong foundation for your franchise system, assisting your franchisees to succeed.

If you haven't created the visual identity for your brand, consider working with a graphic designer to create a distinct visual identity that reflects your brand. You can also work with a brand strategist to develop a tag line that conveys your brand message.

Remember, branding involves more than just a name or trademark. It's everything your business does, from marketing to menus and uniforms. Even the layout and interior styling of your premises matter. A key characteristic of franchising is uniformity, so consider whether the look and feel of your premises can be easily replicated for your franchisees.

It is important to spend time and energy on your branding early on. Rebranding can be complicated and risky as Uber found out when their 2016 rebrand failed and they had to rebrand again in 2018.

Importantly, before you start the process to franchise your business you need to establish whether you can use your brand or trademark throughout the territory in which you want to franchise your business. 

If you are able to use your brand throughout the territory in which you want to franchise your business, you should take steps to protect your brand before you franchise.

 

Branding Services

 

2 - Can you replicate your business systems?

Do you have in place business systems that can be easily followed and replicated?

It is important that all of your key business activities have documented processes, procedures and standards. Examples of processes and procedures include inventory management, operations, shipping, accounting, training, customer service, hiring and recruitment and purchasing.

What is it that sets your business apart from your competitors?

If a customer’s experience is an important aspect of your business, well documented customer service related processes and procedures are vital to replicating the business.

You may also provide a franchisee with policies including business operation related policies (such as HR policies), or franchise network related policies, such as site selection or territory selection policies.

If you are operating a retail business, a good point of sale system (POS) is essential. Your POS system should be able to produce all of the reports that will assist in your decision making in respect of the franchise network.

In addition to traditional revenue reports, POS systems can now give insights such as whether customers are returning customers and what a store’s most popular and profitable products are.

Custom reporting is time consuming and expensive, so you need to consider whether an off the shelf system will meet your needs.

Good payroll management is also an essential consideration.

3 - is your product or service consistent?

Do you have in place suppliers and training methods that will ensure consistency across locations? 

When you are considering franchising your business, remember that strong franchise brands are built through consistency.

If a franchise location does not align with your brand standards, it's less likely that customers will return and your brand may be damaged.

A vital part of your brand strategy is maintaining consistent use of your name and logo, including colour, font and size. You should also ensure that your locations have the same feel and appearance.

To ensure consistency in products, you can either supply the franchisees with products or nominate approved third party suppliers who must be used by franchisees.

When it comes to services, detailed processes and procedures must be be in place and franchisees and their employees need to be well trained. 

Ultimately quality and consistency in your franchise network depends on selecting the right franchisees, providing ongoing support and training, and ensuring compliance with franchise standards.

 

 

TAKEAWAYS

The key questions we have set out in this article if you are considering franchising your business are:

Do you have a strong brand?
Can you use your brand or mark throughout the territory in which you want to franchise your business? 
Do you have in place business systems that can be easily followed and replicated?
Do you have in place suppliers and training methods that will ensure consistency across locations? 

While these foundational elements are important, they're not the only ones to consider.

Part 2 of our "Can I Franchise My Business" series examines the financial aspects of franchising your business, that is will the $ work if you franchise your business.

While franchising can be a great way to grow your business, before you make the decision to franchise, it's important to do your research.

 

 

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Disclaimer

The information in this article is general in nature and is not intended to address the circumstances of any person or other entity. Although we do our best to provide timely and accurate information, we do not guarantee that the information in this article is accurate or that it will continue to be accurate in the future.

Ana Haarsma

Written by Ana Haarsma

Ana has worked as a lawyer in the franchise industry for almost 30 years. She has presented papers in franchise law to the legal industry, in the areas of franchise dispute resolution and franchisor insolvency. She was an APAC Regional Director of the Entreprenuers Organisation and holds a bachelors degree in economics.