For many business owners, franchising probably sounds like the best way to expand—but before you jump right in, you have to make sure you know what it takes to be successful. Not all businesses are meant to be franchises. You have to make sure you are ready and that your business model can make it under someone else’s command.
“Any type of business can be franchised,” said Donald Cuba, a franchise analyst for Francorp. “To be successful you have to have a profitable operating unit.”
Francorp is the world’s leader in franchising, and since 1976, the firm has provided full development programs to help ensure the franchise success of more than 2,000 businesses. Cuba works with independent business owners looking to franchise.
Having a strong operating system in place that consistently turns a profit is key if you intend to take your business to the next level. If you are going to sell your operation to someone else you have to prove that it works. Another thing that attracts potential buyers is the amount of time your business has been around—you need enough time invested to protect its future success.
If you expect your business to succeed as a franchise you have to know your point of difference from your competitors. Once you nail down why your business is original, make sure that point can be effectively communicated and sold to others. Your company’s originality will make it more attractive to those looking to purchase a franchise.
Another thing to consider before jumping into franchising is whether or not your daily operating systems can be explained to someone else— in a way they can follow—to get the same results you do. The way the business functions has to be easy to replicate, which may require taking a close look at how things run day to day.
Cuba suggests that potential franchisors keep it simple.
“Simplicity is one of the main things that makes a business a good franchise,” said Cuba. “A restaurant with a complicated menu may be more difficult to work with than one with fewer options.”
Independent businesses can be great franchises, but getting there may be a little difficult at first. Francorp offers quizzes on its website so owners can determine if their company is franchisable. The quizzes ask questions pertaining to length of operation, business distinction, operating costs and operating systems. The firm also offers a franchise worksheet and checklist. These resources help people do their homework so they can determine if franchising is right for them, or if changes need to be made before they decide to expand.