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Home » Franchising

10 Factors to Consider Before Franchising Your Business

Your business’s growth is off the charts, and perhaps you’ve started to consider whether now’s the right time to franchise your business. But before you take the leap, you must consider how franchising will affect your business model, your customers’ satisfaction, and ultimately your revenue.

That’s why we asked ten entrepreneurs from Young Entrepreneur Council (YEC) the following question:

Q. Business is booming, and I’m thinking about franchising my company. What’s one thing I need to do or consider?

1. Your Team

Scaling is a big decision and it takes people who share in your passion for the business to keep it successful. Not only are you letting go of some control, but you are also bringing new faces to the team. Make sure your team is sound in all aspects and you have succession plans in place as promotions and shifts in responsibility occur.

2. Your Customer

When franchising, your focus shifts from serving the end shopper to the people you are franchising your business to. Suddenly your company is more about optimizing the infrastructure for other people’s businesses and less about working with the people buying your product. This is a big transition for any organization and especially founders who are used to working directly with customers.

3. Your Standards

It’s a good sign if you have people or businesses interested in franchising your business. Now, you need to set minimum standards for what skills and experiences are required to run a business like yours and if those interested meet the standards. The criteria might include experience in your industry, a ready base of potential customers, and a certain amount of capital available to start up.

4. Scalability

The most important thing to consider before franchising is “is this business scalable?” Think about the systems you have in place and if they’re buttoned up enough to set up potential franchisees for success. You’ve probably encountered issues you needed to get through, so make sure you’ve thought through those things to ensure your new systems will work seamlessly for new owners and locations.

5. Process Documentation

Document your processes at a high level. For example, if you are an HVAC company and want to franchise, take your top 20 calls and document the steps it takes to complete them. You may not capture 100 percent of your cases, but you want your new franchisees to be able to reference these steps.

 

6. Your Test Market

If you have yet to open additional locations, you’ll want to start by trying another location, ideally in a different city altogether where you can truly put your idea to the test. What works in your city may not work in every city because of cultural nuances, a city’s history, or even the climate and seasonal factors. Just be sure that you’re not missing a factor that could be contributing to your success.

7. Your ‘Hook’

The key to franchise success is offering your franchisees unique products or services that they cannot get anywhere else, also called “hooks.” Consider what is going to prevent a franchisee from deciding a few years down the line that they know the business better than you and that they can do it on their own.

8. Research

The most important thing you should do is research franchising. It involves a whole new set of laws, regulations, and other things you should consider before choosing to franchise your company. One other important factor to consider is whether or not your company is successful and presentable. Be sure that your company fulfills a need that is local enough to make sense to scale geographically.

9. Quality Management

Many of our largest clients are franchise companies. What I have observed to be the biggest downfall when first franchising a company is not having a quality control system in place. You need systems that ensure the quality of your product or service is delivered consistently to all of your franchisees–otherwise, your brand will be tarnished quickly.

10. How Much Control You Have

Think about scale and ask yourself how much control you want or need over each franchise. Do they need to be cookie cutter, or can owners have some freedom to regionalize and personalize stores? Then, look into best ways to retain the control you want to have throughout your franchises.

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