The first question to ask is whether your business is suited to being franchised. Beyond having a track record of sales and profitability at the existing business, there's several factors to weigh here, says Mark Siebert, CEO of the national franchise-consulting firm iFranchise Group.
Consider your concept.
Most good franchise concepts, he says, offer something familiar, but with some unique twist to it. A good example is Florida-based Pizza Fusion which offers a familiar product--pizza--but with all-organic ingredients, delivered in hybrid-electric cars.
The concept has to appeal both to end consumers and to prospective franchisees. There should be an expectation that more units will create economies of scale and increase profits. Additionally, the business needs to be something you can systematize and replicate, not something that needs your personal touch to be successful.
"Ask youself, is the concept salable?" he says. "Can you clone it? Does it provide good returns?
Check your financials.
Most successful franchises take a business that's already profitable and try to replicate that success in other locales. Cleveland-based franchise consultant Joel Libava says he likes to see companies with at least a couple of profitable units beyond the first one already in operation before a company tries franchising.
"Is it just one great restaurant and mama's wonderful pizza sauce?" Libava asks. "Or did you keep growing?"
Gather market research.
Don't rely on your gut feeling that your business would be a smash hit across the country. Gather market research to confirm there is widespread consumer demand beyond your home city for what your franchise business would offer, and room in the marketplace for a new competitor.
Prepare for change.
Becoming a franchisor means you'll be engaged in entirely different activities than you were as a business owner. You'll primarily be selling franchises and supporting franchisees now, instead of selling pizza or fixing toilets.
"Ask yourself if you're comfortable having a role as a teacher and salesperson, selling and supporting franchisees," Siebert says, "as opposed to going out there and doing it yourself."
In addition, franchising your business will require that you relinquish some of the control you've had over how your concept is executed.
"Franchisees won't do it exactly the way you would, even if they do it well," says IFA president Matthew Shay. "If you are so married to your concept that you won't let anyone else touch it, then franchising may not be right for you."
Evaluate other alternatives.
Before you plunge into franchising, you may want to consider other options, Siebert says. Depending on your situation slower growth, finding debt financing or taking on partners are all alternatives that may prove better ways to move forward.
It also can cost $100,000 or more, so ask yourself if your company has the financial resources. Remember that while franchising allows you to grow fast, it also means giving up most of the franchise units' future profits, Shay says.