Franchising can be a big, but valuable step. Besides financial incentive, a key reason that people enter into a franchise situation with their established business is to further its growth.
A key challenge if you’re considering this move will be capital. Raising funds to assist with your franchising plan can be tricky. Unfortunately despite new age capital such as crowdfunding and venture capital, the franchising sector typically lags behind with start-ups being favoured by investors. However, this is not to say that with the right pitch, investor deck and base product or service it cannot be done, especially if you have connections in this sector already. Otherwise, you’ll most likely need to turn to traditional funding sources such as banks and other financial institutions or perhaps some generous family!
The next challenge you could face is to find the right franchise software solution to help you manage the business. While you may not have felt its need yet, with expansion it will become increasingly important to have the right software to track payments, inventory, sales, and customer data. So, learn about franchise software now and get one tailor-made for your particular business model and scope of growth. It is important that you choose a reliable and comprehensive solution from the start that can grow with your franchise business.
It goes without saying, becoming a franchisor of your own business will mean that you truly understand the inner workings of how it runs and the challenges it faces. Surprisingly, not all franchisors have hands-on experience with what their franchisees face on a daily basis. This can make leading your enterprise much more difficult, as corporate-level decisions lack vital information from the ground. To further assist you, you might decide to hire an experienced consultant to guide you through the process, especially if all your experience is hands-on while you have little idea of how to manage a franchise operation. Joining a franchisee association is also a worthwhile exercise to meet others in the sector and share best practices.
If you’re looking to purchase a franchise for sale yourself, this too should involve substantial research and preparation on your behalf. It is a fine balance for a company to play to its strengths yet embrace change to keep ahead of, or even shape, consumer preferences. So begin by studying examples of franchises that have a strong brand identity, but are also evolving. You might not want to buy into one of these necessarily, but getting a sense of how they function will assist you in your search for something that suits you.
Once you’ve located a suitable franchise, carefully considering all the contractual obligations will give you a sense of how much capital you’ll have to have upfront. Unfortunately it is not as simple as paying a license fee and setting up shop. Depending on the level of detail of the agreement you enter into, you might take over an existing site, or you may need to find suitable commercial real estate for lease yourself. So get your business advisors to assist you to determine the true cost of setting up before you commit.