We know having your own business is something that can help us reach our goals in life. Just thinking about having your own time and the possibility of earning more would encourage anyone to start their own business. However, it is not as easy as just thinking about the plans you have in mind since it would involve money, time, and effort. If you have successfully built your own business by now, CONGRATULATIONS! But what if you could take a step higher by making your business bigger? Have you thought of the possibility of having your company franchised?
Franchising allows a business to expand. While giving people the opportunity to run their own business with the help and support of a more prominent company with a proven and successful using its formula. Then again, although it may seem a tremendous happy thought, it doesn’t mean opening a franchise can be as easy in a snap. Franchising your business can be a more significant challenge, yet the rewards can be exponential. It is an option that could be rewarding to many aspiring business owners. But can you level up your business into a franchise?
Do you feel your competitor is ahead of you not because of poor product quality or customer service? Your competitor can reach more customers because it can serve a larger market through various branches in the city. And to just let them take the lead on that aspect can be frustrating.
Barriers To Expanding A Business
“Be in business for yourself, but not by yourself.” There is willingness yet covered with many doubts. Any entrepreneur’s goal is to become successful in their business. But sometimes, some factors prevent them from moving forward. Not doing something about it would just leave you with the thought of regret for not pushing yourself hard enough.
1. Access to capital. Other business owners have considered franchising but lack the resources. Hence, some entrepreneurs would seek financial assistance through a loan. While there is an excellent possibility of being granted a loan and able to expand and open their own business, it would also mean having to pay the interest. And we all know that paying such a loan can be daunting. Therefore, franchising is a good solution since it allows the company to expand without the risk of debt. Moreover, a franchisor can tap into more income streams as the number of qualified franchisees increases.
2. The lack of workforce. Another reason for not being able to expand is finding the right employees that can work for the business immediately. Not carefully choosing the people to work for you can affect the business. You cannot just fill in a position without training. Training new employees can take some time, and worse, they can get hired by your competitor.
Franchising allows entrepreneurs more time to focus on the business by having a franchisee look after the branch. With this, the company will expand since the franchisee has an investment and commitment and would undoubtedly profit from the business. The performance of the franchise unit will surely improve. And so, with that, the brand can continue its presence in the market, which means earning and building equity. As a franchisor, you have more time to focus on strategy. At the same time, the franchisees look after the daily expense management, relieving the franchisor from all that work.
What are the conditions to franchise your business?
You may be thinking of expanding the business to increase revenue. However, you need to have the following conditions before opening your business for the franchise.
- Credibility. Suppose you want to gain a vast customer base. In that case, your business should be able to fulfill what you have promised your customers. They should feel they are receiving what they are paying or value for money. Not only does this mean having excellent products and services that you offer. But most importantly, building a good relationship with all your customers.
- Exemplary Products and Services. Other aspiring entrepreneurs would only choose brands that they can trust. Therefore, being particular with the products and services to choose from is essential. No matter how many similar businesses are in the market, it will surely attract potential franchisees as long as your brand stands out. It is often called an identified Unique Selling Proposing (USP).
- Excellent system. Sharing a business opportunity with others would mean needing a plan to allow franchisees to know more about the business, from the back-office tasks to the operation and delivery of products and services. These should be all documented and easy to understand. A transparent system should be in place for potential franchisees to be able to replicate your business model. Thus, the franchisor must develop an operation manual containing the entire system, checklists, policies, procedures, and strategies.
- ROI in 2 to 3 years. The first year is crucial in any business. But with a sound support system provided by the franchisor, no franchisee will lose his investment if the company can generate a 15-20% return on investment after paying a manager and deducting the royalty fee.
Once you have finalized your decision to expand through franchising, you need to develop a concrete plan for expansion, including growth rate, territorial development, support system, and fees.
As a franchisor, you are more focused on building your network by choosing the right and committed franchisees who can carry your brand and stick to your brand reputation. Being a franchisor, you sell not only franchises but also provide service to your franchises. Therefore, you should have the ability to market and sell franchises. Learn how to attract prospective franchisees and be equipped with the necessary knowledge and materials for the franchising business.
You must remember it is crucial to guide the franchisees’ success. Without these franchisees, the franchise system will collapse. A happy and successful franchisee will likely consider buying another franchise; therefore, taking care of your franchisees should be a priority in this business model.
So can you level up your business into a franchise? What do you do from here?
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You may contact Armando “Butz” Bartolome for questions and more information.
By email: aob@gmb.ph
FB Page: Armando Bartolome
Linkedin: https://www.linkedin.com/in/franguru/
Website: https://www.gmb.ph
