As a franchise consultant, a question I commonly hear is “I have a great concept for a business. Should I go ahead and franchise it now?”
Although as with all general rules there are exceptions, we usually counsel prospective Franchisors that they should be in business for at least one year before franchising a business.
There are many reasons we recommend that you operate the concept for at least one year prior to franchising a business, including the following:
- Proving the concept works. Many ideas look foolproof on paper. Before franchising a business, it is critical that you verify it is viable through actual operating history.
- Proving there is a demand. No matter how confident you are, you really do not know that there is a demand for your products or services until you test them in the marketplace.
- Proving that you can master the challenges of your particular market segment. Seldom can you command the respect of your Franchisees without demonstrating that you can operate the business.
- Working out the bugs. Rarely does the concept work exactly how it is conceived on paper. There are issues that must be addressed and resolved through practical applications. This on-the-job training is critical before franchising a business.
- Showing the concept has growth potential. Ideally, when you launch a new business, it should display steady growth in sales and profits. Of course, there could be exceptions for seasonal concepts or businesses with another valid reason for periodic spikes and dips in sales.
- Understanding how to most effectively market the business. Anyone who has ever promoted a company knows that you cannot predict with any certainty what marketing methods will work and what do not. It is critical before franchising a business that you understand how to maximize the bang for your bucks.
- Proving the concept in order to sell franchises. How can you convince others to purchase a franchise if you have not invested your time and money in the business yourself?
- Understanding the staffing issues. Often, staffing is one of the most difficult aspects of operating a business. When franchising a business, you must comprehend how Franchisees will hire, train, motivate, schedule and retain their employees. This knowledge can be proven only through actual operating history.
As you can see, when franchising a business, it can be difficult to succeed unless you have proven your concept through operating experience.
Thinking About Franchising?
NFA Franchise Consultants have the experience to help businesses franchise. Just watch and listen to some of our client case studies and video testimonials. We can HELP YOU and it doesn’t cost anything to call and talk to us!
So, if you are still asking the “should I franchise my business” question over and over with no clear direction, give us a call at (706) 356-5637, or contact us through our online form. We look forward to helping you take your business to the next level and beyond.