No entrepreneur would have second thoughts of expanding their business particularly when they have established their brand, therefore, taking the business to the next level is just inevitable.
But of course, growing your business through opening a new store or having your business franchised isn’t without any challenges which every entrepreneur should carefully look into.
As what I have often told in my numerous talks, success comes with thoughtful planning right from the beginning. Always plan ahead. Have a ready solution for every possible situation. Prior to initiating any agreements with other people is to truly know if the business is suited to be franchised. To be able to establish a successful franchise, an entrepreneur needs to make other people interested in becoming franchisees. This would be based on how well the business is currently doing in the market with the thoughts that it can be successfully replicated. The business needs to have a resilient record of profitability as well as being able to offer a variety of things to consumers which are not just specific where the business is currently located. It is essential that prior to branching out through franchising, a market research should be done to have a knowledge whether there is a demand for your products/services in various places and if consumers can easily welcome the brand in the target location.
It is essential that you, as a business owner, should be able to know your own capabilities as a potential franchisor. Additionally, you should realize that when you start to consider expanding your business through franchising, you are no longer just looking into one store but will need to have an eye and provide support to a number of potential franchisees. And along with this, you will need to give up some of the control on how the business operates. You had your own ways on how you were able to successfully build your business. Having to deal with franchisees, you should not expect that they can do exactly how you have done it and that you need to learn to be comfortable with it. Understandably, being in a franchised business needs uniformity. However, some franchisees may have their own techniques on how to propagate more revenues without doing something that would harm the franchisor agreement. For as long as they operate accordingly and does not give you any problems, then you should just learn to take a back step in having full control of the operations, but rather keeping an eye to ensure that the business is running the way it should be.
a. Fully penetrate in your current business location and check how well people would patronize your products/services.
b. Build up your brand and reputation organically than rely on other people’s investment to help your business grow.
c. Perfect your business model. Know which products are more popular that rakes in more profit for the business. Is your location ideal? Will it work the same way as in other locations?
A Franchisor’s Role
Being a franchisor entails more challenges ahead. But overcoming obstacles is a sure sign of success. Opening your business for a franchise, may both have an advantage and disadvantage. But being an entrepreneur, risks are but second nature. No Pain, No Gain, right? Here are a few tips on how you can become successful in setting up a franchising business.
1. Provide a living proof of the success and sustainability of your business. You need to encourage people to know how successful your business is. Initially, start off with a pilot franchise that would only require a minimal fee. In doing this, you are able to know if the processes and techniques that your business has adapted all these years can work out successfully. It is a great way of refining the processes to make the business viable.
As the franchisor, you should also be able to decide on how you are going to operate. You also need to think of the fees that your franchisees need to pay and when they should pay them, the duration of the agreement between you and the franchisees, and other important matters which should be clearly pointed out in the franchise agreement such as considering your course of action should your franchisee feel that he is unable to carry on running the business, will you buy the franchise back?
2. The franchise agreement is the bible of all franchisees and franchisors which is why everything that is written on the agreement must be fully understood by the franchisees prior to signing. It is best to seek for a franchising expert or consultant to check on the document and to ensure that it will cover every aspect in the business.
A franchise agreement should contain the following:
· Grant of Franchise
· Opening Date, Territory Limitations
· Fees and Required Purchases
· Term and Renewal
· Protection of Proprietary Information and Other Intellectual Property
· Quality Control
· Damages and Complaint Limitations
· Obligations Upon Expiration or Termination
· Franchisor’s Right of First Refusal
· Relationship between Franchisor and Franchisee
· Non-Competition Covenant
· Dispute Resolution
3. Being in a franchising business, any mistake that one franchise commits may dampen the reputation of the whole business.
This is one of the critical issues which any franchisor should keep an eye into as franchisees, although they pay for their own taxes and all, still, would be trading under the same business name. Customers should receive the same kind of standard and quality of service from all branches of the business. It is highly important that the franchisor ensures that the business name is protected from misuse.
All these things should be taken into consideration to ensure that if there will ever be mistakes in the process, that these would just be minor issues which can be easily resolved.
Franchising can help you expand quickly without having to spend a huge amount of money. To help you make your franchising business successful, look for the right people that can have the same vision as you have, knows how to execute a plan and those that are willing to work as a team. Everything will fall into the right places in time.