I have spent the past 15 years working with brands who want to franchise their business and grow a brand through the franchise expansion model. Our firm, Franchise Marketing Systems works primarily with start up franchisors and brands who have not offered or sold a franchise in the past, sometimes with mid-sized or mature brands who are in need of additional support for growth. In the several hundred times that I have supported a company going through this process, there are some similar traits to the businesses that really make it in the franchise model and those that don’t.
In a franchise consultation, the first questions that I will ask start with financial viability of a model. How ready are you to present your business as a potential investment opportunity to a buyer? Will someone be impressed with the numbers and the concept and the opportunity for themselves to see a strong ROI on their investment? Obviously, the good models can show a stronger financial record than the weak franchise concepts.
Questions come up such as, “Mr. Conner, I haven’t generated any revenue yet, but look at this market and how much it is growing, is my business ready for franchising?” The answer is probably not, a franchisee needs to see that their is an opportunity for them realize a return and believe that you as a franchisor have the tools and experience to get them there.
The Franchise Marketing Systems consultation then goes into detail surrounding the business model, operating platform and technology that is infused into the business. The tighter the operating model, procedures and structure of the business, the easier it is to replicate.
Again, Questions like, “Chris, what is a CRM and why do I need any technology, I just write it down, won’t the that work?” And again, well, probably not. If you are doing everything on your own as a one man show, this works, but when you start to scale the business through franchising it generally doesn’t work. How can you support someone hundreds of miles away if you don’t have technology which provides information needed to tell you how that franchisee is performing?
The franchise interview then focuses on competition, market opportunity and what the consumer market looks like. Obviously, the better mousetrap you have the stronger the franchise opportunity. The market for consumer demand needs to be expanding as well in order to validate a franchisee investing in the business. The increasing demand and market potential for your product or service should be at the root of why you are franchising your business. If statements are made during the consultation such as, “Mr. Conner, the market has shrunk a lot since people started going to Amazon to buy my products, it’s getting harder to compete when there’s less pie to go around,” it’s obviously going to make for a less compelling franchise offering.
Franchising isn’t for every business, it requires a carefully planned strategy, marketing approach and business model to be successful. Take the time to review the model, market and franchise industry before you step into the market. There are many free consultations available with companies such as mine, Franchise Marketing Systems, do interviews, talk with other franchisors and get a clear understanding as to whether your business is ready to be franchised.
For more information, email me!