Connect with us

Entrepreneurs

7 Signs Your Small Business is Ready to Expand With Franchising

Thinking about expanding your business through franchising? It’s a strategic move, but not without its challenges.

Published

on

Image Credit: Midjourney

Are you thinking about franchising to expand your business? If you are ready for more success, opening up multiple locations is an option for scaling up. It boosts the reach of your brand, market share, and profits.

But franchising isn’t easy. When I franchised my business as a home-based service concept, I learned what it takes to be a successful franchisor. Though I researched and prepared extensively, the realities of managing a franchise system were full of surprises.

Based on my experiences, here are 7 ways to know if your small business is ready to expand with franchising.

1. Solid financials and metrics

You’ve been successful in selling your products or services. As a franchisor, get ready to sell the potential of your business as an investment. Take a look at your financial statements and metrics from the point of view of an outsider. What are your profit margins? Do you have seasonal fluctuations? Do they jump up and down from year to year?

Also, how much money are you drawing out as personal income? Showing that your business has been consistently profitable and can generate a decent salary makes your company an appealing opportunity for franchisees

2. There is market potential

Is there wide demand for what your company does? Consider the potential for franchising the success of your business across your region, the country, and around the world. If you offer a niche service that depends on certain market conditions, that limits your ability to expand. Or if you are in a sector which is trending down or in decline, then there is no market potential for franchisees. 

3. You have a trademarked brand

Franchising is all about recognition, which requires the duplication of a name and logo. If your branding has been trademarked, then you have a protected asset you can licence in a franchise agreement. If you haven’t, then it’s time to research. Beware of any similarities between your name and logo with large, established companies. Solid businesses have been ruined by costly legal fights with litigious corporations who issued cease and desist orders to protect their brand.

“Franchising is like building a business with training wheels; you get to learn from others’ mistakes and successes.” – Robert Kiyosaki

4. Your business runs without you

Does your team handle all the day to day operations? If you are still involved in hiring and training staff, managing suppliers, or taking care of customers, then your business is not ready to franchise. There are a couple of reasons for this. First, if you haven’t yet taught staff how to run all the ins and outs of your business, how will you teach franchisees?

And also, franchising is a big commitment, requiring a range of skills. There is marketing, lead gen, evaluation, training, and support. If you are still responsible for every day activities, there is no room or scope for managing franchisees. 

5. You have a manual

Every business has systems, policies, and procedures. But only a business which has fully documented them into a manual is ready to expand with franchising. New franchisees must have access to a manual. It’s their guide on what to do in any given situation. Every single task, activity, and behaviour must be set out in detail. This isn’t just for them to know what to do; it’s also your way to ensure that your brand and concept is being run exactly like you want.

The whole concept of franchising is about duplication and consistency. We walk into any chain store or restaurant because we know what to expect. This is controlled by the manual, which franchisees agree to follow as part of the legal agreement of joining your system. 

If you are thinking about franchising, start documenting every aspect of running your business. Don’t assume that someone will handle things the way you would. Remember that as a new system, franchisees don’t know your brand, your business, and how things are done. 

6. You have lots of cash. And can get more.

What they say about home renovations is true for franchising. It will cost more, and take more time than you think it will. Depending on your business sector, franchise fee, and royalty structure, it may not be until you have 6-8 franchisees up and running before generating the income to support the cost of running a franchise system.

In the meantime, you’ll need cash, and be able to access lots more to cover the costs of legal fees, marketing, training, and support. 

Review your financials with your accountant to measure how much operating cash flow you have available to invest into franchising. And talk to your bank about a loan or line of credit. 

7. You are comfortable being hands off

Do you have a hard time delegating? If you have a struggle with letting go of control, then you are not ready for franchising. As franchisor, you set the direction of the brand, and make strategic decisions. But your franchisees invested in your concept so they could run a business, and they expect you to be hands off.

Which means if they want to hire their brother in law whom you immediately dislike, too bad. As long as the manual is being followed, you don’t have a say in hiring decisions. 

To conclude, franchising is a well-established method for business expansion. After all, there are almost 800,000 franchises operating in the United States alone. However, it takes more than business success for an entrepreneur to become a franchisor. Strong financials, documentation, capital, a skilled management team, and the right mindset are necessary.

Rebecca Page-Chapman, MBA is an online entrepreneur coach and consultant. She is an award-winning entrepreneur with 20 years experience, including building a successful 7-figure B2C service business franchised to 3 cities. After Covid lockdowns closed her company, she earned her MBA from a top university in the UK. She loves supporting entrepreneurs to be more profitable and productive. Her holistic approach involves connecting small action items to big-picture strategy, in alignment with the lifestyle goals of each business owner. Rebecca writes about entrepreneurship at The Hagstone Blog and works online with business owners around the world.

Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Entrepreneurs

6 Smart Moves to Grow Your Business and Your Profits

Practical strategies that companies use to guarantee long-term growth while increasing profitability

Published

on

How to grow your business and your profits

In the world of business, achieving development and success is a shared objective. Maximizing earnings is an important part of this journey because it is a vital source of funding for long-term, sustainable business growth. (more…)

Continue Reading

Entrepreneurs

How Entrepreneurs Can Fortify Their Startups Against Fraud

Businesses that neglect workplace fraud detection are leaving themselves open to catastrophic losses

Published

on

employee fraud

Fraud in the workplace is a problem of gigantic proportions. Everything from a little light skimming of the cash register to fraud at a corporate level represents extreme risks that organizations need to guard against. (more…)

Continue Reading

Crypto

How Entrepreneurs Are Revolutionizing Industries With Blockchain

Blockchain technology has become a revolutionary force in the new digital age

Published

on

blockchain for entrepreneurs

Blockchain technology has become a revolutionary force in the new digital age with its decentralized nature, immutability, and enhanced security. It offers a vast sea of possibilities for entrepreneurs across various industries. (more…)

Continue Reading

Entrepreneurs

Lessons We Can All Learn From Martin Luther King Jr.’s Leadership

While reflecting on the magnificent life of Dr. Martin Luther King Jr. I began to uncover what truly made Dr. King such a powerful leader

Published

on

mlk jr

While reflecting on the magnificent life of Dr. Martin Luther King Jr. I began to uncover what truly made Dr. King such a powerful leader. Many revere him for the change he brought forth so it’s no wonder that he was heavily influenced by the man who said, “Be the change you want to see in the world”. He embodied that statement on the deepest level and lead people through one of the most challenging yet historic times in our nation. 

But what was it that made Dr. King’s movement so different than the rest? A quality that transcends ego and unites a people so divided? 

My greatest and most moving discovery while studying the life of Dr. King was the very answer to our question. 

Yes, he had the personality to be a leader, yes he had the bravery to use his voice, yes he evoked REAL change in government and policies, but the manifestation of all those comes from his willingness to lead a movement truly rooted in consciousness. 

A peaceful approach

Dr. King was continuously met with frustration, hate, and even violence by both law enforcement and those who wanted to fight for equality through violence. But the more violent things became, the more he dug his heels into a peaceful approach. Dr. King’s unwavering faith in the power to lead with peace and not violence is undoubtedly why his legacy is such a pillar of our nation still to this day. It is easier to fight.

Hate, anger and separateness from one another are primitive emotions on the emotional scale of well being but It takes awareness, understanding and elevated consciousness to move from a place of peace and understanding. Dr. King knew that we all have access to these states of higher consciousness and that our true power lies in a peaceful approach.

He is an example of the truest essence of our consciousness in this human experience. How to truly love your neighbor as yourself. 

Conscious compassion

Even the strongest opponents are human. Meet hate with love + compassion for the enemy” he said. It wasn’t his resistance to violence that made him a peacemaker, but rather his commitment to keeping compassion and connection to all humanity at the forefront of his movement. A profound understanding that underneath all the hate, violence and discrimination, we are all one. We all come from the same source and we are all human.

A conscious king

A man of his position, his power, his following could have been easily swayed by the human temptations of the ego. But he remained steadfast in his cause to bring forth real change. He understood on the deepest level that we are truly a stronger force in the universe when we move as one unit, with one mind, and one goal. That the separation from one another is the weakness of humanity. That our strength is in those things that unite us all, the qualities that give us life.

His success was in uniting not just the people of America but the consciousness of America.

No matter our gender, or our social class or our color, we all love, and we all seek peace. We all feel joy and happiness, we all want to be met with compassion and understanding. 

His cause went far beyond the need for physical freedom and equal rights. His cause was for freedom of mind, freedom of heart, freedom to be one. 

Lead with love

In his last speech he said, “I may not get there with you, but we AS A PEOPLE will get to the promise land”. And we will. At some point, we will inevitably come back to this oneness that we all come from.

The truth is? We don’t know when our last day is. Our last march. Our last speech. So this Martin Luther King Jr. Day I ask you, what will your legacy be? Are you leading a life founded in the principles of Dr. King’s movement, founded in the higher consciousness of humanity? Every moment is an opportunity to love, to show compassion, to bring forth peace and in the words of Dr. King “The time is always right to do what is right”.

Dr. King said, “I’m here to remind you, we’ve come a longggg way, but there is still work to be done”. 

And I’m here to remind you this Martin Luther King Jr. day in 2024 that we HAVE come a longggg way, but there is still work to be done. 

His fight is our fight. His mind is our mind. His spirit is our spirit. Rooted in the consciousness of all humanity. We are all one. And when we embrace the understanding of that, we will truly say

“Free at Last, Free at Last, Thank God Almighty, We are Free at Last”.

Continue Reading

Trending