Ray Titus is CEO of United Franchise Group (UFG), a global leader for entrepreneurs with brands in over 1,600 locations in 80 countries.
Franchising is a proven model for growing a business, and today is the best time I have personally seen in more than 35 years to consider franchising a business.
Franchising can allow you to rapidly grow and scale your business model. It allows franchisees to benefit from the good work you’ve already done, establishing operations and brand recognition. The franchisee covers the cost of opening their location and turns it into a thriving new business as you focus on growing the brand and securing recurring revenue.
Whether you are curious about ways to scale growth in your business or are already thinking about transforming your business into a franchise opportunity, here are some things to consider.
Determine If Your Business Is Franchise-able
What are you doing that is different or better than other businesses offering similar products or services? Is what you are doing teachable? Can it be replicated? Is your existing business successful?
If you can clearly answer “yes” to these questions, then franchising might be right for you.
Benefits Of Becoming A Franchise Business
Opening additional business locations is a time-consuming process and can take a lot of resources. Franchising can offer a way to grow quickly without depleting resources from existing or original locations.
Converting to a franchise model can be expensive, but so can adding locations. Franchising shifts the terms of the investment because the franchisee takes responsibility for costs associated with opening and operating the new location.
In turn, franchisees save on the costs and the time associated with the initial setup of a business such as operational systems, training materials, manuals, documents and sourcing while also benefiting from marketing collateral and brand recognition.
Since franchisees have made an investment and have a stake in the profits, they are also more likely to stick it out during tough times. As a franchisor, the royalties you receive are a direct reflection of the success of your franchisees. You both have a vested interest in each other’s ongoing success.
Hire A Company To Turn Your Business Into A Franchise
While it’s not required, it is a very good idea to hire a franchising expert to help you. Avoiding one problem could pay for this service. Make sure you hire an expert consultant that understands franchising and has experience running and, best yet, owning a franchise company.
When looking for a company, find one that has been around for more than 10 years and has proven experience in the states you wish to franchise. Check to make sure they have reliable resources for your annual legal disclosure documents. If you want to grow outside of the U.S., find out in advance about their capabilities for international expansion, and choose an advisor that is both well-connected and has proven experience in many countries.
Hire a dedicated manager for the franchising company you create. Pro tip: Make sure to have two LLCs—one for your business and one for your franchising company.
Build And Protect Your Brand
As a franchisor, your most important asset is your brand. Your brand is not just your logo; it’s your culture, your beliefs and your attitude toward your customers.
If you do franchise your business, you’re giving people the ability—and responsibility—to represent your brand. Whether it will be you who screens and selects the franchisees or someone else, it is important to have a rigorous qualification process.
Also, keep in mind that your company will essentially have two very different customers—your franchisees and their customers. Having clear guidelines in place for the use of brand assets as well as consistent messaging internally to support teams and externally to customers, will be a significant change from how your original business operated.
Accelerate Your Business’s Growth Through Franchising
When done right, business growth can be much faster through franchising.
Franchising your business can accelerate expansion and build a stronger business foundation through the process. In addition, franchising allows franchisors to compete with much bigger businesses—saturating markets before non-franchise companies can respond.
All in all, to be a successful franchisor, you have two priorities. First, stay focused on ensuring each franchisee is successful. Second, keep selling more franchises. Nobody wants to be a franchise of one. Always think of your franchisees first because you’re helping them achieve their dreams, and they’re helping you accomplish yours.