This question crosses the mind of most entrepreneurs that experience moderate to good success with their businesses. The question usually originates through others. People who reach out and ask the business owner if they are going to franchise or interested in franchising. The decision as to whether to franchise your business is a big one. Regardless of the type of business you operate, there are three things that are consistent in every good franchise:
- Simple: Every good franchise from McDonalds to a start-up have simple systems that are clear, concise, tested and effective. In other words, their process is known, written down, followed, and extremely efficient.
- Repeatable: You can operate a great business. A profitable business. But if you can’t set it up to where it is repeatable, you can not create a good franchise. Many have tried. Many have failed. Michael Gerber, in the E-Myth Revisited, speaks of operating your business as if it was going to replicated 5,000 times over. This is the mentality that you must implement to discover if your business is indeed a model that is repeatable.
- Profitable: It goes without saying that you must have a profitable business in order for you to scale and grow it. But it also must have the ability to be profitable across multiple locations. There are many businesses that are profitable in a single location but falter once they begin expanding to different geographic location. This failure can be due to a number of reasons, but it is important to understand why and first know that your business is successful in different areas BEFORE you franchise your business.
There are certainly more things to consider than just: Simple, Repeatable, and Profitable. But if you measure your business against this basic standard, you will have a good idea if you have a franchisable business. This is just the start, though. Before you get dead set on franchising, you must understand the costs involved as well.
If you haven’t already, click here to listen to a recent podcast on this very topic.
One word of caution, though, don’t get married before your first kiss.
Don’t fall in love with franchising until you have fully vetted it, completely understand it, and have looked at other licensing models.
After all, there are many ways to grow and scale your business. Franchising is often a good option, but not always. Too many businesses in the haste of wanting to grow and grow fast, crash and burn.
Franchising the right way is NOT easy.
It takes planning, strategy, good support, outside advice, and a strict dedication to the process. You must have a crystal clear understanding of not only how your business operates, but how others can make money doing the same things you are doing. And most of the time, the “others” will have never run a business much less your business. Hence, the importance of: simple, repeatable, profitable.
