Creating a franchise involves selling your business to franchisees that could sell your offerings with the use of your brand, intellectual property, and operating processes. Your franchisee’s rights and responsibilities would be stated in a franchise agreement and manual, which governs how they could operate and promote your franchise business.
Essentially, you make money off of your franchisees through fees and royalties, as well as ongoing operational support. The thing is, not all businesses have franchising potential. So before you even plan on how to start a franchise business, make sure that your business could be franchised.
Is Your Business Ready for Franchising?
To determine if you have a “franchiseable” business, your business must meet the following requirements:
- Your business should be easily replicable, such that it could be operated based on standard procedures that prospective franchisees could use as easily and effectively as you.
- Your target market should be sufficient for the number of franchises you plan o giving out.
- Your brand must have a distinct and excellent reputation and market profile or could easily develop both.
- Your offerings should provide franchisees with a competitive edge over competitors and offer them higher returns than if they invest in a different franchise or start their own business.
- You’ve already legally protected all your intellectual property, like registering your brand for instance.
- You have a keen eye on selecting the best possible franchisees.
- Your business is capable of providing the support and services franchisees need. These usually include training employees, picking out a location, inventory, marketing, tax planning, funding, accounting, IT, etc.
- Your business is completely capable of updating your offerings and developing new ones to suit your target market.
- Your fee structure would benefit both your business and your franchisees.
So, Should You Franchise Your Business?
Yes, becoming a franchisor is very hard work, especially when trying to get your franchise off the ground, and this endeavor would cost you a lot of money initially. However, if you do your market research well, put in ample time and effort in developing your franchise business, have a brand and products that would appeal to your target customers and choose the right franchisees, the returns would all be worth it.