If your business has reached the point where franchising is an option, there are several vital questions to ask — and answer — before taking the proverbial plunge. Fiscally speaking, franchising is a very different animal, and the impact of going the franchise route carries significant economic, legal, and sundry business-related ramifications if done incorrectly. Beyond having a sound operational plan, look closely at the following five inquiries and ensure that your responses are consistent with potentially franchising your business.
- Is your business franchise-worthy? The most obvious initial question is whether your business is indeed one that can be franchised successfully. Closely examine what you offer your customers, then look for parallel businesses that have already been franchised. If the competition is robust, that means your business can potentially flourish as one built on duplicating a host entity, and thusly fit in with the franchise mainstream. If there are no franchised ventures that match up with what your business does, the franchise model may not apply and you will need to rethink your options.
- How do you want your business to grow? Growth is the goal of every entrepreneur, from goods/services offered to market segment to the bottom line. The standard corporate growth model is somewhat different than the franchise business version, and will require you to evaluate your vision for the future. Franchising can accelerate a company’s growth projections in various ways beyond economics, but can also leave a company vulnerable in even more ways. Carefully consider the methodology beyond your business plan, and determine if the growth you expect is consistent with what can be generated by franchising.
- Do you have a paper trail for training and developing new franchisees? Successful franchised companies share numerous traits, first and foremost training. Anyone looking into becoming a franchisee will require sufficient education in the machinations of your business. As a result, you should have a paper trail of procedures and protocols to transfer to all invested parties. It is imperative to have a uniform game plan to get franchisees off the ground from the outset, but also an established support system to guide them through the early stages of franchise development, as well as into the future.
- Have you retained proper representation? Entering the franchise fray presents a considerable amount of new compliance issues and legal considerations that will require specialized attention. From tax filings to franchise disclosure statements, the list of franchise-specific documentation is extensive –this is the area that merits professional representation to keep you, your business, and your future franchisees protected.
- Are your business insurances in place? Similar to retaining proper accounting and legal representation, you must also maintain sufficient coverage to be determined by an insurance professional. Franchises and franchisees alike must be suitably covered to guard against potential risks inherent to their respective business niches, and having insufficient or incorrect policies could spell disaster. Research industry specialists and go with the best you can afford.
Becoming franchise-ready is a major step up from merely thriving as an entrepreneurial venture. The successes you have reaped thus far will be put to the test should you decide to franchise your business. The key, however, is to first determine whether the marketplace will support your business as a franchised entity, then to consider the assorted concerns associated with putting potential franchisees in the best positions for success.
The five aforementioned questions are designed to elicit accurate feedback for you to evaluate and ultimately act upon. If you have solid answers and a clear blueprint for newcomers to take part in your business, then franchising may provide a profitable direction for your company to continue moving forward.
This article was syndicated from Business 2 Community: Five Important Questions to Ask Before You Franchise Your Small Business
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