Should I Franchise My Business? 6 reasons why franchising may not be the right option for your business

Franchising as a business model spans a whole range of industries and sectors, from fast food, hospitality and retail, to children’s activities, dog hotels, travel and pest control. In fact, there are so many weird and wonderful franchise opportunities that it would be easy to assume that any business can be franchised successfully.

But while franchising can be a great path to expansion for many brands, it’s certainly not an automatic path to success, nor is it the best and most appropriate course of action for every business. These 6 reasons are certainly not exhaustive, but they are some key points to consider when considering whether franchising is right for you and your business.

The business cannot be easily replicated

A basic concept of franchising is that the franchisee acquires from the franchisor the right to operate under its brand and sell its goods or services using the developed business model in different territories or locations. Therefore, the original business concept must be simple enough to be replicated and the franchisee to be easily and quickly trained to deliver the franchise brand proposition. It is also important that the concept can be successfully transferred to other locations – a business whose success depends on its specific geographical location, seeking a niche of customers in a certain area or a product that is only available in a limited area probably should not to be franchised.

The business is not financially stable

Franchising should definitely not be used as a means of trying to save a sinking ship. Building a franchise brand is not only an expensive process and a long game, but you cannot want and expect others to invest in your brand and business if they are not financially successful.

The numbers don’t stack

It is extremely important to have a realistic approach to the math of franchising a business. As stated above, franchising can be an expensive process in the first place. You need to have a firm idea of ​​what it will cost to replicate the business model and setup for each new franchisee, as well as training and ongoing support. If that cost runs into the millions, then chances are you’ll face huge financial hurdles in attracting franchisees, especially without a track record of success.

The sector has no longevity

For any franchisee looking to invest their hard-earned money into a franchise business, they will want to feel confident that this is a business venture that won’t just be a flash in the pan. Will what you offer stick, or is it something that will likely go out of style?

You will struggle to relinquish control

This is a real problem for many would-be franchisors – their business is their imagination, a concept they birthed and nurtured to grow. As a franchisor, you need to be able to step back and trust your franchisees to deliver your beloved business model. Not only that, but you also need to be able and prepared to make some tough decisions if things don’t go according to plan. The right mindset is critical and not all personality types will be suited to the franchisor role.

The business does not have enough experience behind it

As a franchisor, you (and your operations team) will be the point of contact for advice and support, the advisor for your franchisees and also the place they will come when things go wrong. Be confident that you have the experience and expertise behind you to pass this on to your franchisees. If not, you will most likely end up with a disgruntled franchise network, which in turn can be stressful and incredibly damaging to your brand.

There are many factors to consider when assessing whether franchising is the right course of action for you and your business – and importantly, whether you are truly suited to the franchisor role.

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