Franchising is quite opposite to its literal meaning – free. It needs a lot of attention, time and thought on both the franchisor and franchisee sides to check if they are ready to take the plunge. For a business owner to decide whether his business is ready to be grown is the franchisee route is a big decision to make. Some criteria that can help owners make this decision are as follows:
- Is your business working?: Your business needs to be successfully working in all aspects – Generating profits, having a successful sustainable model, with a smaller learning curve for anyone else who wants to start a franchisee. All this would make entrepreneurs excited enough to apply for its franchisee rights and begin the model.
- Do you need to expand quickly?: Some business owners at times want to expand their business quickly much more than what they can achieve by growing their brand organically. Also taking this route by self takes more time, capital and attention from the owner and will slow down the time needed for expansion. In such a situation, franchising your business is a good way to good way to expand quickly to more geographies – more countries / regions / cities.
- Do you need to penetrate the market better?: Franchising also helps in penetrating the market better by taking the brand as close to the consumer as physically possible as franchise owners would preferably open stores in any potential areas with good demand for its products.
- Does your brand have potential beyond current regions?: Potential beyond current regions can come from analysing consumer research on product demand.
- Can you clone your business?: The business must be clone-able. Basically a product that is standardized enough to be replicated easily and following a business model with good systems and processes from manufacturing to delivery and service. There needs to be good documentation to make franchisees understand the simplicity and standardization of the product. You should also be ready for training, branding and such support needed by franchisees.
- Do you need to simplify the business? This is a mix of business owners trying to lower their cost resulting from less recruitment, saving time and effort on procurements, optimizing etc and also simplifying the management by choosing the right franchisees and letting them manage the show.
- Can your business generate return for franchisees?: Finally the business needs to generate good returns for franchisees with them also having a clear understanding of fees, expected costs and profits, break even points etc.