How to franchise your business
Want to franchise your business but not sure where to start? It's a daunting decision to make, but get your strategy right and you might never look back. Franchise consultant Krishma Vaghela, founder of Franchise Futures, reveals what it really means to franchise your brand and, most importantly, how to make it a success.
What is franchising?
In a nutshell, franchising is an ongoing arrangement where the owner of a business (the franchiser) gives another party (the franchisee) permission to take their brand and run their product or service in a new territory/location. The relationship requires investment from both sides. The franchiser needs to invest time, energy and money into training the franchisee. The franchisee will pay fees and/or a percentage of sales revenue as royalties to the franchiser, in return for using their business name, processes and offering.
How do I make my business work as a franchise?
Decided that franchising is for you? Follow independent franchise consultant Krishma Vaghela's five top tips to make sure yours is a success.
1. Test more than one location before you franchise
This will tell you whether your business can be profitable in other regions, before you start investing. Choose places fairly far away from each other, rather than neighbouring counties or cities, to get a true picture of how things would work.
2. Don't rush into multiple franchises too quickly
You need to invest heavily in your franchisees – in terms of time and money – to help them become successful, so don't jump into too many too fast. Pace yourself, so you can take learnings from your first franchisee and use them when recruiting your second. This way, you can constantly evolve and improve your process and offering as you grow your network.
3. Plan ahead and map out future territories early on
Once you've given a franchisee a territory, you won't be able to do business in that area yourself. So think carefully about how and where you'll expand in the future and what your long-term vision is for your brand, to prevent mistakes early on.
4. Listen to and learn from your franchisees
Ask them for suggestions – it'll make your business model stronger and more successful. Potential future franchisees will want to speak to your existing network, so it's important for the growth of your business that they're happy.
5. Don't forget about an exit strategy
If your franchisee decides to sell or retire, do you want to be able to buy their franchise back? Or take a percentage cut of the sale price? It might seem a long way off, but it's important to set out exit terms in your franchisee agreement.