How do I know if my business is right to be franchised?
The three steps are:
1. Determine the profitability of the business. In order to be franchisable, the business needs to be able to make a reasonable return in a reasonable time frame. Remember, even if your current business is profitable right now, a franchisee will have to pay royalties and other expenses that you don't have so you have to factor those into the equation when evaluating this factor.
2. Determine if the business is readily "teachable." In other words, can you fairly easily teach someone else (who doesn't have any of your years of experience) how to successfully operate the business with at most a few weeks of training? Also, do you have strong documentation of your systems of operation so they can refer to the docs when they have issues or questions?
3. If you have positive answers in the first two steps, it is time to get expert advice. There are many consultants and attorneys with years of experience helping people decide whether or not to franchise a business and you should consult with a few of them. Most of these experts will provide initial consultations free of charge. They will usually also provide you with extensive background material related to the costs and the requirements for becoming a franchisor. Seek their assistance and opinion before proceeding.
Becoming a franchise company can be a wonderful idea but it is also going to be a ton of hard work and it will cost hundreds of thousands of dollars so be prepared and take the steps necessary to make the right decision for you.
Jeff Elgin has almost 20 years of experience franchising, both as a franchisee and a senior franchise company executive. He's currently the CEO of FranChoice Inc., a company that provides free consulting to consumers looking for a franchise that best meets their needs.