What is franchising?
Put simply, franchising is the practice of using another company’s business model, taking on its branding, codes of practice, reputation, products, and so on. If you are franchising your business, it means you are letting other people buy the rights to use your business model, while running it themselves.
What’s in it for me?
By franchising your business you can quickly increase the number of shops, outlets, restaurants, or markets you are present in. This gives you great coverage and helps you grow your business without having to do all the work yourself. There’s also a financial benefit, as those taking on the franchise will pay to do so, often on a regular basis, as well as handing you a share of the profits.
Sounds pretty good!
In many cases it is, but there can be down sides. You’re trusting someone else with your brand and its reputation. You’re also letting a part of your business go, and potentially losing money you could have earned yourself if you were to dedicate yourself to expansion without franchising.
So, am I losing control of my business?
While the franchisee is responsible for running that branch of your business, it remains just that – your business. You can set the terms of the franchise agreement, you set the standard, and you can ultimately pull the plug if it’s not going well. Franchise deals are usually for a set term and can be renewed or withdrawn when the contract runs out. However, if you’re a control freak, then franchising might not be for you.
When should I consider it?
Think about franchising when you want to expand and don’t have the money, people or time to do so. For some people it’s part of their original business plan, but for others it’s something that becomes a consideration much later on. Whenever it is, you have to be sure that you’re willing to give something away in order to make gains.
Can help you expand
Other people help promote your brand
You get paid for doing little work
You’re giving up control of franchised outlets
You won’t make the amount of money you would if you took charge of the new outlets yourself