Do I have to franchise my business?  6 reasons franchising might not be the right option for your business

Do I have to franchise my business? 6 reasons franchising might not be the right option for your business

Franchising as a business model spans a whole range of industries and sectors, from fast food, hospitality and retail, to children’s businesses, dog hotels, travel and pest control. In fact, there are so many weird and wonderful franchise opportunities out there now that it would be easy to assume that any business can be successfully franchised.

But while for many brands, franchising can be a great avenue for expansion, it is certainly not an automatic path to success, nor is it the best and most appropriate course of action for every business. These 6 reasons are certainly not exhaustive but they are some key points to keep in mind when evaluating whether franchising is right for you and your business.

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Business cannot be replicated easily

A fundamental concept of franchising is that the franchisee acquires from the franchisor the right to operate under his brand and sell his goods or services using the business model developed in different territories or locations. The original business concept must therefore be simple enough that it can be replicated and for a franchisee to be easily and quickly trained to be able to provide the franchise brand offering. It is also important that the concept can successfully translate to other locations: a business whose success depends on its specific geographic location, a niche demand from a customer in a particular area, or from a product that is only available in one area. limited arena probably shouldn’t be franchised.

The business is not financially sound

The franchise should by no means be used as a vehicle to try and save a sinking ship. Not only is creating a franchise brand a costly process and a lengthy game, but you can’t ask and expect others to invest in your brand and business if it doesn’t have a track record of financial success.

The figures don’t add up

It is vital to have a realistic approach to the math of a business franchise. As stated earlier, franchising can be an expensive process in the first place. You must have a solid understanding of how much it will cost to replicate the business model and create for each new affiliate, as well as ongoing training and support. If that cost reaches into the millions, chances are you will face huge financial hurdles in attracting franchisees, particularly without a track record of success behind them.

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The industry has no longevity

For any franchisee looking to invest their hard earned money in a franchise business, they will want to be sure that this is a commercial venture that is not going to be just a flash in the pan. Will what you offer keep going or is it something that is likely to go out of style?

You will have a hard time letting go of the realms

This is a real problem for many aspiring franchisors: their business is the result of an idea, a concept that they gave life and cultivated to grow. As a franchisor, you need to be able to step back and trust your franchisees to realize your beloved business model. Not only that, but you also need to be capable and prepared to make some tough decisions if things don’t go as planned. The right mindset is key and not all personality types will be suitable for the role of franchisor.

The company doesn’t have enough experience behind it

As a franchisor, you (and your operations team) will be the go-to for advice and support, the sounding board for your franchisees, and also the place they will go when things go wrong. Be sure you have the experience and track record behind you to be able to provide it to your franchisees. If not, you will most likely end up with an unsatisfied franchise network, which in turn can be stressful and incredibly damaging to your brand.

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There are many factors to consider when evaluating whether franchising is the appropriate course of action for you and your business and, more importantly, whether you are truly suited to the role of franchisor.

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