Growing the business by franchising
It is time to grow your successful business and scale new heights, and you are faced with the option of going it alone or going to a venture capitalist and offering them a certain amount of control in exchange for capital. Franchising the business opens up a larger market to the new businesses with lower investment and total control of the business. There are few fundamental questions you must ask yourself, before diving headlong into Franchising.
Can your business be franchised?
For a business to be franchised it must have a standing in the market. Good press, Goodwill, and good management are the basics. It is essential to know if your business can spread to other markets in its current form. Your business processes must be streamlined so that they can be taught in a few months. Reading prevalent market trends is a must. Franchisees generally end paying 4-8% in royalties and if they do not recover their investments, they will be displeased, leading to further issues.
Have you done your Due Diligence?
Due diligence refers to all and any appraisals undertaken before selling or buying a business. Make sure that your financials match up to your proposal as investors will check up on your financials too. Ensure that you have a concrete plan for growth. Investors will invest only if you are sure of how you plan to grow the business. Besides the financials, you must also be aware of all the legalities across the states. An understanding of standard franchise contracts, state registrations and federal and state franchising rules are a must. It would be advisable to involve a franchise lawyer at this point.
Have you set up operational standards?
Operational standards help retain quality at across all franchisees universally. A stand operational manual that explains and teaches the business processes are essential as procedures to deal with problems like negligence allegations and consumer liability. Regular checks on facilities are part and parcel of the franchise business, after all when it comes to quality, the buck stops with you.
Can you sell your franchise?
Finally, be prepared to sell and promote your franchise. Attracting potential buyers is an art as well as a science. DVDs and Brochures are just media that helps potential buyers understand what they are buying. At the end of the day buyers are buying the vision you sell them. Buyers must clearly understand your sales, compliance and disclosure dealings.