Franchising as a business model covers a whole range of industries and sectors, from fast food, hospitality and retail to children’s activities, dog hotels, travel and pest control. In fact, there are now so many weird and wonderful franchise opportunities that it would be easy to assume that any business can be successfully franchised.
But while franchising can be a great expansion path for many brands, it’s certainly not an automatic path to success, nor is it the best and most appropriate course of action for every business. These 6 reasons are certainly not exhaustive, but are some key points to consider when considering whether franchising is right for you and your business.
A business cannot be easily duplicated
The basic concept of franchising is that the franchisee acquires from the franchisor the right to operate under its brand name and sell its products or services using a developed business model in different territories or locations. Therefore, the initial business concept must be simple enough to replicate and for the franchisee to be easily and quickly trained to deliver the franchise brand proposition. It is also important that the concept can be successfully translated to other places; a business whose success depends on a specific geographic location, customer demand in a particular area, or a product that is only available in a limited area probably shouldn’t be. patented.
The business is not financially sound
Franchising should definitely not be used as a way to save a sinking ship. Not only is building a franchise brand an expensive process and a long game, but you can’t ask and expect others to invest in your brand and business if it doesn’t have a track record of financial success.
Numbers do not add up
It is very important to have a realistic approach to the mathematics of business franchising. As mentioned above, franchising can be an expensive process at first. You need to have a clear idea of how much it will cost to replicate the business model and set up for each new franchisee, as well as training and ongoing support. If those costs run into the millions, chances are you’ll face huge financial hurdles in attracting franchisees, especially without a track record of success.
The industry has no longevity
For any franchisee looking to invest their hard-earned cash into a franchise business, they’ll want to feel confident that it’s a business venture that won’t just go in the pan. Will what you offer continue to be the trend or is it likely to go out of fashion?
You will struggle to let the authorities down
This is a real problem for many prospective franchisors. their business is their brainchild, a concept they birthed and nurtured to grow. As a franchisor, you need to be able to take a step back and trust your franchisees to deliver on the business model you love so much. Not only that, but you need to be able and willing to make some tough decisions if things don’t go quite as planned. The right mindset is critical, and not all personality types are suited to the role of franchisee.
The business doesn’t have enough experience behind it
As a franchisor, you (and your operations team) will be the source of advice and support, the sounding board of your franchisees and also the place they will come when things go wrong. Make sure you have the expertise and experience to pass this on to your franchisees. If not, you’ll likely end up with a disgruntled franchise network, which in turn can be stressful and incredibly damaging to your brand.
There are many factors to consider when weighing up whether franchising is the right move for you and your business, and more importantly, whether you are truly suited to the role of franchisee.