Can my business be franchised?
Can my business be franchised? Well, that is the $64million question. The answer may surprise you. It’s nearly always a Yes. However, (and here’s the rub) it might not be a good franchise. Here’s a quick guide to the main considerations.
Can you franchise any business?
If you own your own brand then you can consider franchising it. Brand ownership is important because you are legally granting brand rights to someone else. Therefore you need to be sure you’re not selling someone else’s brand. If you are a wholesaler for ACME Widgets then you couldn’t sell someone else the rights to ACME widgets because ACME owns that brand. Just because you are selling it, it doesn’t mean you can franchise it. However, you can franchise your method of selling it. If you’re in this position it’s probably best to talk to one of our team.
Does it make money?
Money should also be a consideration when asking can my business be franchised. In our experience, there aren’t many franchise buyers out there for loss-making franchise formats. Similarly, they will also have to pay a royalty whereas you don’t. Do some sums based on what effect a 10% royalty on the gross sales has on the bottom line.
Can anyone do it?
Thirdly, will your business be successful in someone else’s hands? Consider what experience they may need and what personal qualities too. We all have our strengths and weaknesses. Can my business be franchised? If it’s Yes, then it’s only yes if the right franchisees join you. The answer might be different for different people.
Where can they trade?
Likely as not you’ve had no restrictions on where you sell your stuff. A franchisee will. So be sure that there is a sufficient population of potential customers for a franchisee to prosper. Giving ad adequate commercial opportunity may require a generously sized trading region. That trading region might also need to be exclusive to protect the franchisee from overly aggressive other franchisees. The idea is everyone works in harmony, not in competition. Bear in mind also that you will waive the rights to trade in that region too.
Is it affordable?
Fourthly, how much money will they have to raise? Is it prohibitively expensive versus the return? You’d really need to love selling widgets to pay a £500,000 franchise fee that returned £20,000 in profit potential. A part-time franchise will probably need to be a lower fee to reflect the lower return. A retail franchise with an expensive shop fit will obviously cost a franchisee more.