Benefits of franchising
While there is a lot of hard work involved - especially in the early stages - there are considerable benefits to becoming a franchisor and as each franchisee is also effectively running their own business, there is a sense of shared responsibility. Some investment is required to enter into a franchise so franchisees are likely to have more drive and determination than staff on the payroll.
By utilising the experience of individuals based all over the country your brand can grow in a localised way. Customers often feel more comfortable dealing with someone who understands and is familiar with their region. This also means that you can expand without losing the personal touch, which so often happens with large corporations.
Franchising can also provide an opportunity to make a mark overseas, utilising the knowledge of franchisees in different countries, allowing for brand reach that might be impossible if attempted by the core business.
By utilising the experience of individuals based all over the country your brand can grow in a localised way
The overheads are also a lot less than ‘traditional' expansion, as each franchise is responsible for their own premises, which means capital outlay is greatly reduced. Beyond the initial fee, a franchisor can expect either a percentage of takings, or to sell stock to the franchisee at a marked up price, which means a regular revenue stream.
Can your business be franchised?
Not every business is suitable for franchising. Above all else, the company must be successful and financially stable - franchising is not a solution for an ailing enterprise, if you can't make your business work, it's unlikely somebody else can. Your operations must be easily ‘formulated', so your brand and how it works can be picked up and run with by almost anyone. The quicker a franchise can get going the better for everyone involved.
Having enough resources is also a crucial factor as a good franchisor will look after its franchisees to ensure their success - if your franchisees fail this could be incredibly damaging to the good name of your company, not to mention detrimental to your bottom-line. PR, marketing, materials and someone available for help and advice should all be provided as part of the package.
Attracting franchisees
The success of your franchise rests largely on the people you choose to run it, so it's imperative you select wisely. In order to attract the best franchisees you must present an appealing business proposition. You should promote your franchise to gain brand recognition and, if you want to grow on a large scale, it is imperative that the products or service on offer are nationally relevant.
Some of the most successful businesses in the world have used the franchise model to expand (think Specsavers, McDonalds, Kall Kwik and Coffee Republic) so if you get it right, it obviously works. A good franchise should offer great prospects to its franchisees and result in great profit for the franchisor, with expansion only limited by the number of people you get on board in different areas, rather than financial constraints.
If you are interested in becoming a franchisor, seek professional advice from the banks, your local business link and the British Franchise Association (BFA) www.thebfa.org
