Before you franchise your business

There are a few initial steps or considerations you need to look at before you franchise a business.  The first one is, does your business provide a service or product that is easily replicated and teachable to others?  If you run a business that requires specialized skills or tools then it may not be a good candidate.  Having a unique idea or service is great, but if you can’t show someone else how to do it, how do you expect to franchise the business?  Another key observation that some people overlook is the fact that you should have a well established business that has proven itself in the market.  Your business must have some history and that history must reflect positive growth and income on a consistent basis.  You must be able to demonstrate the financial benefits of your business to potential franchise buyers.  If you were in their shoes and were looking to buy a franchise, you will want to know ahead of time that it will profitable to them.

Having clearly defined and documented business processes and procedures will be necessary before you franchise your business.  Can you give someone a handbook to your business?  Then, would they be able to follow the guideline and be as successful as you have with your business model.

Is your Franchise geographically limited?

Having a business that is dependent on the region or geographics will limit it’s growth and franchise potentials.  However, depending on your target franchise levels, this may be something you have already considered.  As an example, if you have a business that deals with high end marine boats and you tried to sell your business to a potential franchise buyer in Phoenix, you likely would get laughed at.   In this case, you would target your sales to the larger lakes, higher class communities and coastal cities.  You need to consider supplies too.  If you were to franchise your business on the other side of the country, but your business relies on specific supplies from a local company, the buyer would have to use alternative supplies or have them shipped across the country, adding to their overhead costs.

Getting that first franchise buyer

So, lets assume that you have all the right stuff in place, a successful business model, a duplicatable system or service, a non-geographically limited business and fully documented financials and processes.  Now, the next trick is to make your franchise available for sale.  The biggest and most attractive selling point to any franchise ( and the franchise market is very competitive ) is your potential or assured profit.  If you can show proof that your business is easy to setup, easy to operate and will generate a good income for the buyer, then it will sell very well.  A franchise buyer is looking to invest considerable amount of money for a business they can start as quickly as possible and recover their initial investment.

Do your research first.  You should spend considerable time investigating the franchising systems and market demand for your business service.  Having a franchise consultant assist is a huge benefit, but be prepared to spend some of your capital for the consulting services.  Having a properly set franchise fee and royalty schedule can make your business very successful. Having a poorly designed cost structure could welcome franchise buyers that are less dedicated to the process or serious about success.

Having a low franchise will attract more franchise buyers. Once you have the first one sold and started you can then increase your franchising fees after.  Having a successful franchise of your business will bring ever more buyers too.

Small business franchising is usually a natural path for a successful business.  Basically, the simpler your business is and the easier it is to write a “how to do this business” manual, the easier it will be for you to franchise your business.  Do your research and make an informed decision on how and when to franchise.