Estimated reading time: 3 minutes, 14 seconds

franchisingThe time has approached.  You have overcome the once incomprehensible goal of stabilizing your core business and understanding the ebbs and flows of your business model, now you are considering expansion ideas.  It could be compared to a long hike up a steep mountain and now you have reached the precipice and are looking at a divide in the mountain range where you need to choose a path to take your business.  Franchise expansion is one option for business growth, but how would you know when to take franchise expansion seriously? 

The first indicator that franchising might be right for your business is that people are asking for it.  You get calls, emails, friends, family and LinkedIn connections asking you how you started your business, whether you can help them get started or flat out whether they could buy a franchise of what you do.  The best indicator that franchising could make sense is that the market is demanding you offer your business as a franchise.  What better time to sell something than when the customer already wants to buy?

The second indicator that you might want to consider franchising your business is opportunity to expand the business into new markets with the need for local market representation.  People want what you have in markets where you aren’t.  You are in San Francisco selling your unique goods and customers keep ordering from New York which is great, but you have to fly cross country to make sure the goods get there and are delivered the right way and that the customer is happy.  You could hire someone in New York, but the cost is significant and no one wants a long distance employee relationship, do they?  A Franchised business in New York puts an owner-operator in charge of that business, they make the investment in that business and you get the benefit of New York representation through a franchisee. 

The third indicator that you should franchise your business is that you are complimented repeatedly for your brand.  People want to be associated with you.  Your logo looks cool, your color scheme looks attractive, taglines are witty and your overall presentation just “gets it”.  Franchising is Marketing turbo-charged, it is the packaging of a business model and replicating the brand into a new market.  Consumers AND franchise investors many times start with an interest in a brand, then decide what they will spend money on.  If your messaging is solid and your brand is on point, odds are you may have an opportunity to scale your business through franchising. 

The fourth indication you may want to consider franchising your business is that you find yourself looking for exit strategies and are coming up empty handed.  Unfortunately, most small businesses in the U.S. are worth only 1.5-3 times your annual profits making the end sale opportunity rather unbecoming.  Franchise systems can achieve valuations of up to 20 times earnings once they have proven their ability to scale in the right markets.  The value of your business asset increases once you prove it isn’t reliant on you and carries value to the next owner. 

Regardless of whether franchising makes sense for you and your business or not, it certainly should be considered as a viable growth channel.  For more information on how to franchise, visit the Franchise Marketing Systems Site:

Mr. Conner has spent the last decade in the franchise industry working with several hundred different franchise systems in managementfranchise sales and franchise development work.  His experience ranges across all fields of franchise expertise with a focus in franchise marketing and franchise sales but includes work in franchise strategic planning, franchise research and franchise operations consulting. 
Last modified on Thursday, 25 August 2016
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