You’re a self-made business owner with a great product/service to sell and a brand you can be proud of. You’ve been in business long enough that you think it’s time to expand your operations. Sure, there’s always the option to just open more stores/outlets of your own. But then you somehow have to find the time to own and operate them.
Own and operate…wouldn’t it be nice if that meant you could hire good people and things would just about run themselves? You know better. The effort it takes to own and operate anything is considerable. Just finding the “right” people and making sure they’re doing everything as well as you would, keeping everyday tabs on how things are going and ensuring your employees are motivated and happy is more than a full-time job. Running the one business you’ve already put your blood, sweat and tears into to get this far means you already have one of those, thank you very much.
Then there’s the “holy grail” of business success that many entrepreneurs aspire to…franchising. Unlimited expansion potential, residual profits, a mostly hands-off, day-to-day management scenario ― once your franchisees are properly trained and you’ve imparted all of your hard-earned wisdom on how things should and must be done, of course. It’s the logical next step. It’s what you’ve always dreamed of and wanted. It’s the perfect solution to meet your goals when it comes to growth, profit and your overall picture of success.
Oh, if only that were all true and everything so simple!
Basics of Franchising
Ask any businessperson to sum up in one word what the purpose of marketing is and you’ll likely get one answer more than any other ― profit. Marketing is about making money. And guess what, so is franchising. But franchising is more than just another marketing strategy ― and make no mistake, that’s exactly what it is ― it’s also a whole and different business operation unto itself, apart from the business you’re already in. Just because you have the skills to run your own successful business does not for one moment mean you have the skillset to be a franchisor. Not only that, but just because your product/service has done well in one place and under a certain set of circumstances does not mean it will thrive and grow elsewhere. Just ask the countless number of franchise operators who thought they had a concept that just couldn’t lose, no matter where it was implemented, and who paid a hefty price finding out they were wrong.
If you’re the owner of a home-based or other small business in particular, franchising might not be your best option. You may want to explore expanding your operations via another route, such as a home-based or other business opportunity, licensee opportunity or distributorship. Whatever the case may be, there are still some things here that you may find helpful ― not because all points apply necessarily, although a number of them do, but because what follows may prompt you to ask questions you never thought of before.
The simple truth is that business and licensee opportunities, distributorships and franchises of all sizes operate very differently depending on the nature of their structure and contractual agreements. The critical point to be made here is that if you are considering any one of them, it’s important to explore and think carefully through the pros and cons before you jump.
The Pros and Cons of Franchising
When it comes to franchising in particular, any business owner who’s thinking about it would do well to consider the following:
There are some key positives to franchising, that’s for sure. Here are just some of them:
For every upside to anything, there is always a downside. When it comes to franchising, here are just some of the potential pitfalls:
Deciding to Franchise Your Business: The Necessary Elements for Success
Once you’ve done your homework and leveled with yourself about the potential ups and downs of franchising, you’re not even halfway to making the decision to actually pull the trigger. Before you do that, there are some firmly established basics that must be in place if you’re going to even have a shot at making things work. They are: