By Franchising has gained popularity as a marketing method in the past few decades, especially in Australia. As complex as it can be in some cases, franchising is basically a legal relationship between the franchisor, the party who provides permission to the other party to use their product/service under their brand, and the franchisee, the party who is the at the receiving end of this grant.
Franchising proved to be an innovative way of doing business, even more favourable than venturing into a start-up for most cases, and a win-win situation for both the franchisor and the franchisee. While franchisees can operate using an already established brand, franchisors always see this as an expansion of their business. Franchisors gain money with less effort, widen their scope, and even localise their products to better blend in with communities – all of this without risking too much loss on capital.
However stellar this can be, you should always remember that before opening your business for franchise, there are some things that you should consider to boost the chances of succeeding and making a good return. Here are four questions that you should ask yourself to determine if your business is ready engage in this strategy:
Can you make other people understand your brand?
Entrepreneurs should not only understand the brand they have, they should also be articulate enough to make people see the things they see. Systematisation, uniformity and consistency are the hallmarks of a great franchise, and because of this, a franchisor should have a clear outline of operation systems, communication and methods for the franchisee to follow. They should be able to describe not only this, but also the core values the brand lives by. Remember that you have to protect the brand itself at all cost.
Can it be replicated?
Make sure that your brand is no one-hit wonder. Assess its clonability. A business should be unique enough to gather consumer attention, but also simple enough to be repeatable. A business that relies mainly on its unique ways should be able to translate these into the franchise. You should also assess if the planned franchise can survive challenges without entrepreneur’s personal touch and become sellable even at different locations and management. Choosing the correct franchiser is always the first step.
What is your goal in terms of scope and growth?
Strategic planning is always the first line of armaments. Determine if you want a statewide plan or a growth in international level. Determine the timeline of your expected growth through these channels and when do you think the brand could return value to your franchisees. You can always remodel along the way to achieve these plans. Having long-term plans that you modify through short-term actions is better than having no plans at all.
Can you handle the cost?
Yes, franchising may be low-cost, but it does not mean that the franchisor will never spend in this venture. Costs multiply in brand development, seeking potential franchisees, training and marketing materials, compensating experts, and covering legal fees. It is always good to seek out the people who can help you, including investing partners and a group of experts in franchising.
Answering these questions can give you a broader perspective on things, but an expert team of franchise solicitors would be greater help. There might be things that you do not know, and experience has given these advisors the knowledge and skills to make sure you take a calculated risk every step of the way.
Want to know more about franchising your business? Contact your franchising team from Baybridge for more information.
