Is Now the Right Time to Franchise Your Business?

Franchising a business can be an exciting prospect for many entrepreneurs. You have found success locally, and are now ready to expand well beyond your home base.

But while the prospect of going nationwide is exciting, there are a number of issues to be aware of. That’s why we asked members of Young Entrepreneur Council (YEC) the following question:

Q. For anyone thinking about franchising their business, what is one crucial thing they should consider first?

1. Assess if there is enough demand

The last thing a new franchise wants is to see their franchisees fail. Make sure that your business has a great amount of demand before thinking about a franchise model. One way to determine demand is to pay attention to Google keywords mentioning your business. If you see a huge spike in people searching for your business in a certain city, then you know there’s interest there. —Syed Balkhi, WPBeginner

2. Understand what you need to control

Franchising is about control. You want to know exactly what is critical to the business’s success and what can be put aside. When you franchise a business, you need to set standards and controls which ensure the business’s success and protects the brand. You may have to give on some areas and choose what they will be, but if you are clear on this, then you are in control. —Baruch LabunskiRank Secure

3. Determine if your business can be replicated

Franchising can be a great growth strategy for businesses that can be replicated fairly easily. It’s likely to fail if a business depends on the input of specific individuals or if its processes are hard to duplicate. Start by thinking about your business’s core processes, documenting them and considering whether they could be replicated by other people in a different location. —Vik PatelFuture Hosting

4. Research the potential

Not every business has franchise potential. Research the interest and demand for what your business offers to see if it can be replicated in multiple areas, and have the potential to be successful and grow. It may not be something that is sustainable. —Serenity GibbonsNAACP

 

5. Consider hiring a consultant

Franchising your business is a complicated process, so consider whether you should hire a consultant to help you along the way. There are franchise developers you can hire, if you have the funds, who will simplify the process for you and make sure the transition occurs without a hitch. —John Turner, SeedProd LLC

 

6. See if you can step away from your core business

Franchising is about a process. You need to define literally every single step of your business, from which suppliers to use through how someone would greet a customer at the door. Before you franchise, see if you can step away from your current business. If you have defined your processes well enough so that you can be away for a week—and be happy with the results—then you’re ready! —Aaron Schwartz, Passport

7. Understand the franchise agreement

You should understand how the franchise agreement will restrict you from setting up a similar business. For example, many franchise agreements include a non-compete provision prohibiting you from conducting a similar business for a certain period of time within a certain distance of a franchise location, and stringent confidentiality provisions prohibiting you from contacting customers. —Doug BendBend Law Group, PC

8. Determine if your business can run without you

If your business cannot operate without you, it is not at a stage where it’s scalable. You have to get your business to the point where you’re no longer involved in the day-to-day in order to consider scaling. —Rachel Beider, Massage Outpost

 

9. Document everything

It’s crucial that you document your entire process from start to finish before franchising your business. You want your franchisees to be as successful as you are (or more) so they can spread the word and you can get more interest. Even the smallest things should be documented, such as phone scripts, email templates, and anything they may need in order to succeed. —Jared Atchison, WPForms

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10. Choose the right location

Your business is special, so you want to make sure you’re establishing new franchises in the best location. For example, consider an area that is already aware of your brand and would be receptive to your business (but careful not to stay too close to home so it won’t interfere with your original business). Additionally, while a large city may be tempting, a smaller city may be less competitive. —Shu Saito, Fact Retriever

11. Make sure you have enough funds

Franchising is not cheap. I would know; I’ve built one. There are so many things to consider in terms of location, documentation, legality, and regulations. You won’t be able to do it without bringing on a consultant. Before that, though, ask a few questions. Can my business be simplified enough so that someone with only a high school degree could manage the entire operation? Who is willing to buy? —Nicole Munoz, Nicole Munoz Consulting, Inc.

12. Consider potential risks to your brand

While having franchises can be profitable, it also means that you give up quite a bit of control over your brand. Franchisees, while they need to adhere to certain conditions, are still business owners, and you can’t simply fire them if you don’t like the way they’re operating. When setting up a franchise agreement, make sure you specify standards and policies that protect your reputation. —Kalin Kassabov, ProTexting

13. Think systems-dependent, not expert-dependent

A systems-dependent franchise model creates a repeatable customer experience by relying on an extraordinary system that can be run by ordinary people, and not relying on the hopes that you’ll be able to hire extraordinarily talented experts at every location, every time. When your operations manual can be expertly managed by anyone, regardless of skill level, then you’re ready to make the leap. —Magnus SimonarsonConsultwebs

14. Start building your team now

Start building your team now. If you’re going to franchise and want to maintain your corporate culture, work environment, and a passion for your business, you’ll need to start looking for people now who are willing and able to take all of that on. Plus, they’ll need to learn a lot of that before they can put it all into practice. —Andrew SchrageMoney Crashers Personal Finance

RELATED: 8 Reasons Not to Franchise Your Business

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