Ending Soon! Save 33% on All Access

How to Successfully Turn Your Business Into a Franchise If you think the franchise business model is only for restaurants, think again.

By Roger David Edited by Amanda Breen

Opinions expressed by Entrepreneur contributors are their own.

Four million.

That's the number of new businesses registered in the United States in 2020 alone.

But does that mean that expanding a business right now is an unwise decision? Not if approached in a smart fashion. Yes, expanding a business on the tail of a global pandemic isn't for the timid; when done strategically, though, it can take your company to the next level.

One model that has a proven record of success while lowering risk to the company is the franchise model of expansion. In 1963, my dad and uncles pooled their collective savings to buy their first restaurant. After running the business successfully, the time came to expand. They looked for cost-effective ways to replicate their success, leading them to develop a franchise model that guaranteed the quality of both the food and service while growing the business. Each new restaurant is its own unique entity, but one that follows a tried-and-true plan to ensure success. Over the years, we've honed the process to expand and add new restaurants in a very cost-effective manner — to both ourselves and to franchisees.

Related: What You Really Need to Look for When Considering a Franchise

Is franchising the right move for your business?

If you think the franchise business model is only for restaurants, think again.

ACE Hardware, Pearle Vision, Marriott International, RE/MAX, The UPS Store and Orangetheory Fitness are some of the non-restaurant companies that have grown by franchising. Franchising can bring your business to new markets with partners full of local knowledge to make it successful. This can increase chances for growth while arguably lowering the risk for the franchisor by having the financial liability shared by both parties.

There are three main things to work through when determining if your business would be a good fit for a franchise model:

  • Good ROI. Prove your business is profitable and that someone who invests the time and resources into your business can expect the same return on his or her investment.
  • Simple operations. Can someone else follow your playbook and be successful? If the answer is "maybe," first work to streamline your operations without sacrificing quality or ROI.
  • Support. Can you support someone else and his or her needs as he or she establishes a franchise of your business? Your job will turn from running a business to supporting someone else and setting him or her up for success. Get a team in place that can make this a reality.

Develop a growth plan

Next, put together a strategic plan with clear and measurable goals. Having a plan that identifies key target markets and the ideal franchise candidate is crucial.

To develop your growth plan, think strategically about growth. The lowest risk way to do so is to sell more. Think about soda — there's the 6-pack of cans or a 2-liter, but they're also sold in a 12-pack or a case. Can you apply that same thinking to your own business?

Consider how you can grow your market penetration. Can you sell your goods or services in a new market, a new part of town or even a new city altogether? This is where franchising can come into play as an effective way to grow because it has advantages to both the franchisor and potential franchisees.

Seeking outside counsel to develop a well-rounded growth plan can be beneficial too. Our family business had the benefit of having a diverse set of skills and viewpoints available when it was time to expand, but you can bring in trusted friends or family of your own, or even hire outside counsel to help you.

Related: Looking to Buy a Franchise? Here's How to Start.

Find opportunities to simplify operations

Good growth plans are important to support expansion. For one of our brands, the team worked to research and rework the business to streamline operations, enhance the guest experience, increase efficiencies and profitability, and update the restaurant's design.

These choices added up to big savings. If you're thinking about franchising your own business, regardless of industry, look at all facets of the business and find opportunities to simplify without sacrificing what made you successful. Look for efficiencies to keep costs lower and streamline the process so that it can be replicated with ease. Find the right team of folks who can help you build a solid expansion plan.

Ensure your franchise benefits both parties

The shared investment of a franchising model provides benefits to both the franchisor and franchisee alike.

The franchisor gains the capital needed to expand the business while the franchisee gets the expertise of the company to ensure success, and both parties are vested in the venture. For a franchisee, this means you have a trusted partner who's done the work needed to deliver a package ready for you to make successful with your own hard work and contributions.

When it's time to search for a franchisee, find a good leader who's well-capitalized and has proven business acumen, and one who's willing to follow the system you set in place. But finding the right franchisee is more than just that.

If you haven't already, identify your top values as a business and have a well-defined company culture. Once you have those criteria identified, search for a candidate who can mirror that back to you. Your franchise partner should also have a clear passion for the industry you're in, and your business in particular. Without that, none of the rest matters.

If you do the first part right and find the right people, you're only partway to success. Building a great franchisor-franchisee relationship is critical, and transparency is key to making these relationships successful. There is naturally a bit of give and take in these kinds of relationships, but being transparent and having great communication skills for both parties is what will drive success.

Related: 10 Franchises Reveal What They Look for in a Franchisee

There's an old expression: "Nobody plans to fail, but many fail to plan." When it comes to expanding a business, maximizing every opportunity to grow cost effectively is critical to success. Be mindful of these things, and your business will expand while keeping costs down and your spirits up.

Roger David

CEO of GSR Brands

Roger David started his career at Gold Star as a dishwasher and now leads the organization, boasting two iconic brands in its portfolio as president and CEO of GSR Brands.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business Models

How to Become an AI-Centric Business (and Why It's Crucial for Long-Term Success)

Learn the essential steps to integrate AI at the core of your operations and stay competitive in an ever-evolving landscape.

Business News

Kickstarter's CEO Explains Why the Platform Is Changing After 15 Years

In an interview with Entrepreneur, Kickstarter CEO Everette Taylor explains the decision-making behind the changes, how he approaches leading Kickstarter, and his advice for future CEOs.


5 Steps to Preparing an Engaging Industry Presentation

You can make a great impression and generate interest with an exciting, informative presentation. Find out my five secrets to creating an industry presentation guaranteed to wow.

Business Solutions

Save on a Lifetime of PDF Management for Memorial Day

Easily convert, edit, and annotate PDFs for work and business with this deal.