Should Your Business Be a Franchise Business?

How do you go about determining whether your business has a future as a franchise business? This is the ultimate question that you have to consider as a potential franchisor. You may have a successful business and may see franchising as a sure route to success, but it is possible for franchising to be the wrong route for your business. Like other major business decisions, this is something that you will have to do research on and to think about long and hard.

 

Determining Your Business’s Suitability to be a Franchise Business

 

One of the first issues you need to consider is the type of business you would like yours to grow into. If you want to expand your business by a few regional branches or offices, then franchising is not likely to be the way for you. Franchising involves so much legal red tape and expense that you do not want to venture in that direction for a relatively small expansion. If, on the other hand, your long-term plan is to expand nationwide and to do so dramatically, then you are probably right to consider turning it into a franchise business. Franchising is ideal for large-scale, accelerated growths of this kind because they are more financially manageable this way. Rather than having to shoulder all the associated financial burdens, you can rely on your franchisees to share the load. Furthermore, because they are investing their own capital into the process, your franchisees are bound to be more invested in making things work than would an employee you hired to run a branch of your business.

Something else you have to think about is whether your business will work well as a franchise business. Not every business can work under this model. Some businesses work best as mom-and-pop stores. They owe much of their success to the unique styles and personalities of their operators and to other contextual factors. If someone tries to replicate these businesses at other locations, he or she will quickly realize that they do not translate successfully in the new contexts. A business of this kind does not make a good franchise business. For businesses to be franchised successfully, the formulae on which they are based have to be replicable in other contexts with equal or greater success.

In addition to being replicable, your business should sell a distinct, innovative idea that makes it stand out in the market in order to survive post-franchising. It is not enough to simply copy another franchise business’s ideas and hope for success. You will be competing with that business, and the only way to do so effectively is to offer customers something that your competitor doesn’t.