When do you know that your business will make a good franchise?
If it were an easy question to answer, there would probably be a lot more successful franchises out there. Oftentimes, businesses jump in when they’re not ready or hold back when they are, thanks to uncertainty about exactly how the transition from one location to multiple ones is supposed to work. Given the complexity of the change, that’s understandable.
But at some point in your career, that question is probably going to cross your mind. How do you know when you’re ready to stop being a small business caterpillar and transform into a beautiful franchise butterfly? Also, what a terrible analogy that was! Someone stop me.
A bit of research from the National Federation of Independent Business is just the elixir we need to arrive at an answer. The author of this particular piece has a host of tips for arriving at a conclusion, in the form of questions you should ask yourself before you dive headfirst into an empty concrete pool.
As always, I’ll help boil these down to their barest essence:
- Make sure you have enough money. I can imagine few fates worse than deciding to go the franchise route and simply running out of the cash you need to make it a possibility. Ensure that you either have the cash on hand to make the transition or be sure you can borrow enough to make it.
- Have an original or at least durable idea. This is critically important for the future of a franchise. There’s only room at the top for so many restaurants, quick service automobile shops and kazoo repair joints. In the case of the last one, there’s probably not even room for one. When you’re considering whether to make the leap to franchise, you need to be able to appeal to a wide audience outside of your homegrown niche. A failure to do so—understanding, for example, that the best gumbo in New Orleans may not sell very well in Idaho—is going to ensure your franchise emulates the Hindenburg.
- Figure out who would want to buy this franchise and why. Entrepreneurs become franchisees for a number of reasons, but a big one is the support structure that exists within franchises. You need to understand the kind of business owners who would want to buy in to your concept, why they would want to do so and how you can support them.Come up with a plan for providing that support or you’re not going to be able to attract anybody.
Have other tips for fellow businesses considering the change to franchise? Let’s hear them!