Franchise Your Business

Not every successful business is a good candidate for franchising. You might be better off scaling within your current organization. Or you may want to find ways to expand your existing business.

Before you even think about franchising, ask if your business meets these basic criteria.

1. Have you already established multiple locations?

You can’t franchise an idea and one successful location does not prove much. Franchisees will want to know your business model is bulletproof and has stood the test in multiple locations before they invest.

To get your business “franchise ready” you should have at least three locations already operating at a profit and be open to sharing the initial investment totals for each, as well as financial reports.

2.  Is the business generating a significant profit?

Franchising can’t save a floundering business. If you’re not turning a profit, opening more locations is a bad move.

Check in with your accountant to understand the true profitability of the business from the owner perspective. Business owners take profit in a lot of ways that don’t show up in a P&L statement. For example, the company might cover your auto lease or personal cell phone bill.

3. Is there a high demand in most markets?

Some businesses appeal to a hyperlocal pool of customers. To franchise successfully, you need a business that can drum up customers in a majority of densely populated areas. There’s a reason so many successful franchise businesses involve universal needs like food, cleaning, or auto care.

Research markets and competitors. Imagine how your business would fare in different cities. You need enough viable markets for potential franchise units to expand and grow.

4. Is it easy to learn?

The hardest thing about franchising might be maintaining brand consistency and ensuring a positive customer experience across all locations.

What would it take to teach a brand-new hire to operate the business to your standards? Franchisors must provide thorough training programs that can teach the franchisee how to be successful at their business. Before you start selling franchise locations, you’ll need to develop your training manual and ongoing strategy for franchisees.

Passive income

The most obvious reason to franchise your business is to expand in other markets. Once your franchisees are onboarded and trained, your job is not done. You need to make sure they run their business according to your guidelines. The competition is fierce and the franchise will need to be innovative to stay ultra-competitive. After all, franchisors make money when franchisees make money, via royalties.

Motivated operators

How do you know the franchisees will follow your guidelines? Because they have skin in the game. They’re more invested than an employee. A franchisee is an invested partner in your business. They have a lot more riding on the success of this venture than just another job.

Rapid expansion

Franchising can be a quick way to expand your business. To grow a large corporate chain of locations, you need to have access to capital and be able to understand the local market differences without being present or familiar with the local area. When franchisees open locations, they are established in the community already and they are the ones investing to open the business.

Lower operating expenses

Since the franchisee is going to be running the new location this will cost much less than you opening another corporate-owned location. The franchisee bears operating expenses like payroll, rent, and utilities. You are there to mentor the franchisee and grow their business, but at the end of the day, the results are theirs to own.