Whether you’re a retailer, estate agent or in the hospitality industry, franchising can be an effective way to grow your business. But is your business right for this type of business model – and are you ready for the unique challenges it would bring? Here are 10 key points to consider.
- Is your business already tried and tested? If your business has been running for a number of years, you’re happy with your offering and confident it can be rolled out to other locations, then franchising may be a suitable option.
- Have you researched the market? Your business may have proven successful in one or two locations, but is there the demand for your products and/or services elsewhere? Are there any other businesses or franchises offering the same or similar to you? If so, how are you going to set yourself apart?
- Can you let go? If you like to have control over all aspects of your business, franchising may not be the best option. While you can choose your franchisees and train them, you can’t manage them as closely as you can direct employees.
- How will you encourage team spirit? Although it may be in all of your franchisees’ interests to work together for the greater good of the brand, some may not see it like that as ultimately they will be concerned with their own profits. You will need to find a way to make each franchisee understand the importance of the wider team and company.
- How will you protect yourself? If you are going to franchise your business, you will need to seek legal advice. A solicitor who specialises in franchising will advise you on protecting your intellectual property rights and help you draw up a comprehensive franchise contract. You should also draw up operation and training manuals and programmes to help maintain a consistent level of service across all franchisees.
- Have you completed a test run? While it can be tempting to dive straight in and start franchising your business, it is worth running a pilot operation to test it will work. This will help you refine your strategy and identify any potential issues.
- How will you manage the finances? If you franchise your business, you benefit from the capital investment and fees paid by your franchisees. However, you need to decide what level to set your fees. It may be a good idea to consider keeping fees relatively low to start with in order to help your franchisees succeed.
- Who will be your franchisees? Many people opt to become franchisees because it’s a way of running a business without all the usual associated risks. However, this means some necessarily won’t have a proven track record in business. There’s no need to rush into any decisions though and you should weigh up each applicant and their skills, knowledge and experience in the same way as you would when recruiting employees.
- What if things go wrong? Identifying any issues with franchisees early on will give you the opportunity to resolve them before they spiral into anything bigger. Even if a problem can be resolved easily with a face-to-face conversation or top-up training, it is always worth keeping a written record of what happened in case it happens again. For bigger challenges, seek legal advice as soon as possible.
- Where to turn for help? The British Franchise Association is a brilliant resource for advice and information. Your solicitor can also provide support and help.
If you’re thinking about franchising your business and want legal help, contact Ratio Law.Tags: business, business advice, franchise, franchising