Franchising is an attractive option for companies who want to establish an extensive regional or national presence without incurring the expense of building everything by themselves. By passing on a portion of the capital expense to interested partners, you can increase the reach of your brand exponentially to newer lucrative markets.
However, this potential for massive expansion comes with its own set of challenges. Planning and preparing for possible setbacks and addressing inherent challenges plays a role in successfully building a sustainable and robust franchise system for your business.
The first few franchisees
Selecting the right people to franchise your business is the cornerstone for the future of your brand. Not everyone who turns up for the offer will have what it takes to build a successful venture. The right type of franchisee would have business goals similar to your own goals and respect the brand that you have created for your enterprise. You might be tempted to make the offer to friends and family, but they are not always the best candidates for your first franchisees.
It takes more than a unique and attractive business concept to win over your initial franchisees. You cannot just leave your brand to someone else expecting to get everything right the way you did. To ensure steady expansion, you should provide ample support and guidance to your franchisees throughout the process of establishing their new ventures. The success of their ventures reflects on the power of your brand.
Funding hurdles
You should never underestimate the capital expenditures involved in building and operating a franchise system. Merely attracting and identifying optimal candidates for franchisees is a pricey proposition. Beyond this, your business should also have sufficient capital to provide adequate support for your franchisees.
Gathering the needed capital and lines of credit often requires a solid business plan. Not every business has what it takes to expand through franchising. The confidence people have in your proposal is often a portent of the risks and rewards of your new venture.
Find allies
Starting a franchise system is founding an entirely new business based on the same brand. You would need to perfect a system to market your enterprise to potential franchisees. Running two different businesses can be a daunting task. This is a daunting proposition, but one that you do not have to face alone.
Your earliest franchisees are especially important in the early growth of your franchise. By fostering positive relations with franchisees and helping them replicate your brand’s success story, you can build their confidence in your brand’s influence. Their experiences, successes, and satisfaction will be the most potent argument in your proposal pitches to prospective new franchisees.
You may also find that running both businesses may be too much to handle. In these situations, it is often better to leave one enterprise or another in the hands of someone capable and trustworthy.
An outlook of success
Incorporating these factors in your business strategy is critical to getting your plans to build a franchise system off the ground.
Some enterprises might find better success by starting and staying small or by turtling their way to regional prominence one company-owned store at a time. For others, the solid plan they laid out can be the first risky yet rewarding step toward building a regional or national franchise.