Question: I have been considering franchising my business for quite some time. What can I do to make my business attractive to new franchisees? Should I wait before franchising?
Answer: Should you begin to franchise now? It depends. It has never been a good idea to enter franchising without having a feasibility assessment done by qualified consultants, and going forward without such an evaluation would not be a sensible idea. As a leading franchise consulting firm, MSA Worldwide routinely performs this step in our franchise development engagements, either as a formal process or as part of our overview of the client’s business opportunity. There are other companies, who fall into the franchise packaging ranks, that avoid this necessary step as they rush to make commissions by bringing new franchisors to market with a ‘boilerplate’ approach. Make certain that whomever you work with, including if you choose to start the process with a franchise lawyer alone, performs a feasibility examination coupled with a GAP analysis before you begin the franchise development process. You may not like the results of the study – it might tell you to delay the launch of your franchise system, or worse, not to franchise at all – but it’s better to know that before you expend a lot of resources in the creation of a franchise program that has little chance of success.
It will take you somewhere between four to five months to complete the design and development of your franchise strategy and the completion of your legal agreements, operating manuals, training programs, etc. There may be a further delay as you complete the registration process in some states, and then there is a period of time required to recruit new franchisees and sign the agreements and learn how to grow and manage a franchise system. Following that, in most cases, your new franchisees need to come to training, and find and develop their locations before they can open their doors to the public and begin to send you royalty checks. Depending on what the results of the feasibility study have shown and the availability of development capital for franchisees, you should be fine. You will not have missed any opportunity, but may need to make changes to suit a slightly different market than you currently have. Making the decision, though, needs to start with a qualified evaluation of whether or not you are ready to launch and support a franchise program.
Will every concept be right for growth or expansion through franchising? Not every concept is. For example, in a tight consumer market, staples will always be needed, low-cost offerings will be more exciting than higher-priced luxury products and services, and those that free up more time for the second wage earner in a family to be economically productive will be highly attractive.
So what should do well? My list will not be complete, but products and services to take care of children and elderly parents; personal care products and services that provide “mini-vacation” experiences; moderately priced hotels as opposed to larger higher-end offerings; family dining experiences; and lower cost entertainment. Also on the list are outsourced business services that enable a reduction in personnel. With gas prices and auto usage relatively steady, automotive aftermarket products and services and anything that relies on a mobile consumer should do fine.
Franchising can be an amazing vehicle for building wealth – in good times and in bad. The leveraging of resources to expand a brand makes it a great growth vehicle. Its capacity to create jobs and to support a supply chain is why it has and will continue to be the growth engine for our re-energized economy.
Do you have further questions about franchising your business?
MSA can provide expert guidance on building a successful and sustainable franchise business.