Step 1: Are You Ready to Franchise
Are You Ready Franchise?
When you stop to consider whether or not your business is ready for franchising, one common myth is that it costs a half a million dollars or more to franchise. That doesn’t have to be the case. At Franchise Marketing Systems we have developed a system which provides all of the components you need to franchise and grow your business at a much more affordable rate than most might expect. We have a model where a large part of our company’s revenue is derived based on our results and what with the franchises we sell for our clients. There are plenty of great consultants around the country that will work with you to meet your goals without charging a large fee. The point here is you can find an affordable solution without cutting corners and in finding the right team to help you reach your goals.
Every business owner sets goals for their business and those goals naturally lead to a vision. Whether you are looking to expand regionally, nationally, or internationally you need to have a dream and a vision. For business owners who imagine that one day they will franchise, their business needs to be assessed. The first thing you must do is be honest with yourself about whether or not your particular business model can be replicated successfully by others.
If you feel confident that your business model can be replicated, there are six requirements that make your business viable for franchising.
1. Though it might seem obvious, it bears noting that your business must currently be in operation and have proven itself through commercial success. The general rule of thumb is that your business should have been operating profitably for at least three years.
As with most rules, there are exceptions, and this one is no different. The bottom line is that your business model needs to be proven to work and work well. Further it needs to be financially viable.
First Mover Advantage
The first company to become the first major national brand has a distinct and serious advantage. It does not matter if the service or product is inferior or if the branding is poor. The ability to become the first recognizable brand means that you will forever have a competitive advantage and that you will become the comparable for any second and third company to follow. In these situations, capturing market share as fast as possible becomes more important than ensuring the business model has been operating for 3 years. In some instances, this might relate to a new and emerging market providing a service or product which has never been offered before such as a take and bake pizza concept or a mobile headlight restoration service. Or it could be an industry which has been around for decades which has been highly fragmented such as a handyman service. These are industries which are typically dominated by “mom and pop” owner operators.
A real world example is a client of ours called Caliber Patient Care, which is a non-emergency medical transportation company. In just a few short years they went from one operating territory in Nashville, TN to now becoming the first major national brand in this space. It is critical to recognize if your business fits in this category and to decide if and when you should act on it.
Significant Business Experience
If you, as the business owner, have significant industry experience and you’re simply spinning off a new business that’s somehow linked to your already proven business, the three-year rule isn’t as important.
Franchise Marketing Consultant
Franchise Marketing Systems