It’s important as a small business owner to evaluate different options to expand your business in the future. One choice that can be very attractive is franchising. It could allow your business to grow quicker than it might otherwise, without the kind of capital investment required if you do it alone.
Taking your small business and turning it into a franchise will require you to demonstrate your business models’ current success and ability to be replicated for continued financial growth. Here are some things you will need to consider as you determine if your small business is right for the franchise model.
1. Demonstrate Success
How are you able to demonstrate a level of success that can launch a franchise system? What does the business history say about continued interest in your product or service? Make sure that you can illustrate how your customer base and revenues have grown, and explain why that growth will be sustained.
In the early stages, prospective franchisees will look past a lack of franchise experience if the corporate locations show strong profitability, and an exciting growth trajectory.
2. Show Happy Customers
Does your business have positive customer reviews? Expect a prospective franchisee who is considering investing with you to do some basic research which will no doubt include a Google search. If there is no information about your business online or even worse, negative reviews, franchise deals will inevitably fall through.
You can tell yourself that only disgruntled customers take the time to review businesses but try to explain that to a prospective franchisee whose livelihood and future depends on the success they achieve with your brand. Before franchising, take care of your online reputation. Make sure that Google searches return results that validate your opportunity and don’t act as red flags, sending prospects fleeing.
3. Proof of Demand
Conduct market analysis to demonstrate just how much of a market exists for your goods or services and that there is strong growth potential. Include competitive research. Healthy competition illustrates a demand for the product.
Too much competition may indicate that the market is saturated. No competition at all could mean that the market for the product or service isn’t big enough to sustain franchises.
4. Training and Support
Franchising is about more than selling franchises. It’s about building a system that can be easily replicated for future franchisees success. Every franchisee needs to be trained on every aspect of the business, and they need to be trained in exactly the same way so customers have the same experience no matter if they visit a store in Rhode Island or New Mexico.
Developing training and operations manuals are big endeavors, and usually require the assistance of franchising professionals. Before you dive into franchising, document your systems and support programs to get a sense of just how easily others can learn your processes.
As an emerging franchise brand, you likely don’t have much value in the brand name yet. What exactly are you selling to franchise prospects? You are selling your secret sauce to success.
5. Share Your Growth Plans
Prospective investors who are willing to take a chance on an emerging franchise are often looking for the next big thing. Buying into an established industry or a seasoned name brand doesn’t excite them. They are willing to take a chance for the potential of a big payoff, the rapid growth and success of a new franchise concept.
Growth may be your goal, but it is important to be strategic about how you scale your company. Prospective investors will want to know your growth plans to ensure you have a vision that fits with the reality of your business.
Perhaps proper training ensures a slow, geocentric growth pattern. Or perhaps the concept can easily scale from coast to coast or even internationally. No matter what your growth plan is, you should grow at the rate that is natural for your business.
Consider where your business model will work and how far you can reasonably expand the brand into unknown territory. Regardless of how you plan to grow, you have to be able to explain it in a way that gets buy-in from prospective franchisees.
6. Perfect Your Franchise Sales Process
Understand that without the track record that more mature brands come with, what a prospective franchisee will be buying into as much as your concept is you and your team. Don’t underestimate how fine-tuned your sales process needs to be and just how much any investor’s faith in you and your staff will play a part.
Selling a franchise might be one of the toughest sales you encounter. It’s a high-ticket item and in many cases your competition is the status quo – that is, the prospect deciding to do nothing and not make any change to their professional life.
Map out your sales process, from the initial phone calls and emails through the signing of the FDD. Identify what needs to be accomplished at every step, and the specific activity to accompany those goals. Stick to the script and don’t let the prospect dictate the next step. It is important that they prove to you that they can follow a process.
Growing a franchise hinges on providing validating information. Don’t wait for franchise prospects to ask these important questions. Overcome potential obstacles to investing before they arise. As a new franchise brand, your success depends on being able to attract investors and communicate your potential.