If you're the owner of a fast-growing, scalable business, you might be thinking that your next move should be to turn it into a franchise. Franchising can be a great way to expand your business even further, but many entrepreneurs aren't prepared for the reality of what this shift entails.
"Once you decide to become a franchiser, your business and what you do as an individual entrepreneur can change forever," said Terry Powell, CEO of franchise business coaching company The Entrepreneur's Source. "Many entrepreneurs aren't well suited [to be franchisers] — their unique abilities are in building companies and bringing visions to reality, not about managing operations."
While becoming a franchiser isn't right for every small business owner, those who do choose this path will be faced with a lot of new and exciting challenges. If you're thinking about franchising your business, ask yourself the following questions before you make your decision. [How to Turn Your Startup Into a Franchise]
Can your business model be replicated?
The first question any potential franchiser needs to ask is whether his or her business model can be easily replicated. Are your operations simple and scalable enough for someone else to do and do well, in any location? If they are, it's a good idea to start documenting your day-to-day processes so they can be duplicated by future franchisees, said Bobby Harris, CEO of transportation management franchise BlueGrace Logistics. This ensures consistency in employee training, marketing, branding and other aspects of your business as you expand.
Are you willing to give up your entrepreneurial independence?
Franchising is one of the most successful business models out there, but it requires a level of interdependence that you probably haven't encountered as a regular small business owner, Powell said. When you decide to franchise, you'll need to develop strong relationships with investors and franchisees, and your success will depend heavily on theirs.
"Franchisers are never successful without franchisees," Powell told Business News Daily. "You're involved in a license agreement where you depend on each other. One can't win without the other."
As a franchiser, you'll still retain control over your branding efforts, product development and general corporate policies, but you also need to be able to accept the fact that your franchisees have the freedom to run their individual branches of your company. If you can do this, you might be ready to franchise.
Can you create a strong support system?
To convert your business into a franchise, you're going to need a lot of outside help. Having a strong support system in place will help you navigate the complicated, sometimes confusing process of becoming a franchise owner.
"Franchising can take off really fast, so you need a good executive team," said Jason Rivera, CEO of salon franchise Phenix Salon Suites. "We had to bring in some key people as we evolved to help support the different aspects of operations, like real estate and legal."
Rivera said that having a good franchise attorney who understands your franchise disclosure document is critical. Understanding the heavily regulated legal aspects of franchising can help you provide answers and support to your franchisees.
Is your small business mature enough to succeed as a franchise?
If you've answered "yes" to all of the above questions, the last and perhaps most important one you need to answer is whether your business is stable, mature and developed enough to franchise. Think about the time it took you to get your business off the ground. How long did you spend developing your product, implementing marketing campaigns and building up customer relationships? When you franchise, you'll have to produce these results much more quickly.
"Speed to market is everything," Harris said. "If you're becoming a franchise, will you be able to expand much faster? Look at what you have in terms of expenses, and [figure out] how you'll monetize your growth going forward."
These four questions are a good starting point, but there are still a lot of considerations to be made when you're deciding to franchise your business. Before you meet with an attorney to begin expanding, make sure you've done your research and fully understand what this new business move will mean for you.
Originally published on Business News Daily.