Ray Titus is CEO of United franchise group (UFG), a global leader for entrepreneurs with brands in more than 1,600 locations in 80 countries.
Franchising is a proven model for growing a business, and today is the best time I’ve personally seen in over 35 years to consider franchising a business.
Franchising allows you to grow quickly and scale your business model. It allows franchisees to take advantage of the good work you’ve already done, business set-up and brand recognition. The franchisee covers the costs of opening their location and turning it into a thriving new business while you focus on growing the brand and securing recurring revenue.
Whether you’re curious about ways to scale the growth of your business or are already thinking about transforming your business into a franchise opportunity, here are some things to consider.
Determine if your business is a franchisee
What do you do that is different or better than other companies offering similar products or services? Is what you do educational? Can it be replicated? Is your existing business successful?
If you can answer “yes” to these questions, franchising may be for you.
Benefits of Becoming a Franchise Business
Opening additional business locations is a time consuming process and can require significant resources. Franchising can provide a way to grow quickly without depleting resources from existing or original locations.
Converting to a franchise model can be expensive, but so can adding locations. Franchising shifts the terms of the investment because the franchisee assumes responsibility for the costs associated with opening and operating the new location.
In turn, franchisees save on the costs and time associated with the initial set-up of a business, such as operational systems, training materials, manuals, documents and sourcing, while also benefiting from marketing collateral and brand recognition.
Since franchisees have made an investment and have a share of the profits, they are likely to hold out even in difficult times. As a franchisor, the royalties you receive are a direct reflection of the success of your franchisees. You both have a vested interest in each other’s continued success.
Hire a company to turn your business into a franchise
While not required, it is a very good idea to hire a franchise expert to help you. Avoiding one problem can pay for this service. Be sure to hire an expert consultant who understands franchising and has experience running and, best of all, owning a franchise business.
If you’re looking for a business, look for one that has been around for more than 10 years and has proven experience in the states you want to franchise. Check if they have reliable sources for your annual legal disclosure documents. If you want to grow outside the US, inquire ahead of time about their options for international expansion and choose an advisor who is both well-connected and has proven experience in many countries.
Hire a dedicated manager for the franchise business you are creating. Pro Tip: Make sure you have two LLCs: one for your business and one for your franchise business.
Build and protect your brand
As a franchisor, your most important asset is your brand. Your brand is not just your logo; it is your culture, your beliefs and your attitude towards your customers.
Franchising your business gives people the opportunity and responsibility to represent your brand. Whether you’re the one who screens and selects the franchisees or someone else, it’s important to have a rigorous qualification process in place.
Also keep in mind that your business will essentially have two very different customers: your franchisees and their customers. Having clear guidelines for using brand assets and consistent messaging internally to support teams and externally to customers will be a significant change from how your original company operated.
Accelerate the growth of your business through franchising
When done right, business growth can be much faster through franchising.
Franchising your business can accelerate expansion and build a stronger business foundation in the process. In addition, franchising allows franchisors to compete with much larger companies, saturating markets before non-franchised companies can respond.
All in all, to be a successful franchisor you have two priorities. First, stay focused to ensure that each franchisee is successful. Second, keep selling more franchises. No one wants to be a franchise of one. Always think of your franchisees first, because you help them make their dreams come true, and they help you make your dreams come true.