Should You Expand The Business by Becoming a Franchisor?

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Starting a business is the easy part, but sustaining it is a whole different ball game. You’ve done both and the products or services you’re providing are generating a steady stream of revenue.

But you might think that the business has yet to reach its full potential. Franchising can be a good way to scale your operations to a number of new locations.

There are some things to consider before you go down this path.

What are the merits of becoming a franchisor?

Expansion is fuelled by royalties

Other business savvy individuals who see the potential in your idea can replicate the business, with a fee of course. People interested in becoming franchisees need to pay you before they can set up outlets in their respective areas.

Instead of shelling out huge amounts of capital from your own pocket, outlet payments from franchisees will more than suffice in expanding to new locations.

Finding highly qualified people isn’t so much a problem

Lucrative business ventures often attract people of a certain high caliber. Usually, these individuals know what it takes to work smart and effectively run a business independently.

Franchisees under your business chain are not employees that fulfill marching orders. Rather, they are individual entrepreneurs who have agreed to cultivate and expand on your business idea. Your franchise will most likely gain the interest of these types of autonomous and high-performing entrepreneurs

Growth is supported by high replicability

Franchising requires the development of a replicable system that will aid franchisees in conducting business in their area.

With streamlined protocols and playbooks across the board, customers can reasonably expect the same degree of product or service quality, regardless of location. This consistency will be key in solidifying your customer base and converting new customers. It’s much easier to recognize and trust an establishment that executes its purpose quite well several times over.

However, whether it’s a food and beverage, clothing, or hydraulic hose business, there are bound to be some roadblocks along the way.

What are the caveats in franchising?

FranchiseeFranchisee autonomy can lead to friction

As independent entrepreneurs, franchisees will develop their own ideas and opinions on how to improve doing business. But any improvement suggestions will require your say-so, since your are the business franchisor.

If you don’t communicate and connect effectively with your franchisees, disagreements could lead to highly volatile situations and overly aggressive confrontations. The best thing you can do to mitigate this is to be open to new ideas and be willing to accommodate franchisee input.

Streamlined systems may lead to innovation dry spell

It may be tempting to settle with the current or standard approach if business is doing well, but the best entrepreneurs know that they need to be constantly innovating — even when things are going well.

Is there a new product or service that you could add to the current slate to anticipate a future demand? Do franchisees have ideas on new ways of making operations operate more smoothly? These are some questions you need to ask yourself and it’s important to follow through on them.

There are more things to consider before you decide to franchise your business, and ultimately, not all entrepreneurs will find this the right path to go into. But for others who can work around the inevitable obstacles, it can be a highly rewarding endeavor.

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