By DARWIN GRAY
Franchising is an increasingly popular way of growing a business. However, before even thinking about selling franchises, it is important to take professional advice at an early stage to make sure that your business is suitable for franchising – not all businesses are.
It is also worthwhile doing some due diligence yourself to work out whether there are fundamental reasons why your business many not be suitable for franchising. Here are a number of potential hurdles and how they can potentially be overcome.
1. Market penetration
Typically, franchisors will need a strong brand to be able to successfully franchise. Your franchise marketing plan should provide for the growth of your brand in the marketplace, both to customers and also prospective franchisees.
2. A growing market
Businesses that are suitable for franchising are usually either in a growing or at least stable market. It would be unwise to franchise a business whose market is dwindling, unless you can make changes to the business model that is likely to turn this around.
3. A seasonal business
Seasonal businesses are not always regarded as being suitable for franchising. However, it may be possible to market your franchise to particular franchisees to whom it is entirely suitable. For instance, a business in the outdoor Christmas decoration market may well be ideal for someone involved in outdoor seasonal work that tends to dry up during the winter months, such as gardening.
4. Your business is specialist and can only be run by professionally qualified individuals
Many successful franchises can be easily run by anyone, subject to the usual franchise training. However, it may be that your business will require the franchisee to employ people with professional qualifications e.g. an opticians. Such businesses are potentially suitable for franchising, but are likely to be more of an investment opportunity rather than owner managed.
5. Trading history
Many start-up franchises do not have much in the way of trading history. However, provided that the business concept is proven, you can still run a pilot operation and then roll out a franchise network.