Can I franchise my business?

It seems, recently, we’ve been asked that question more and more.

I set me wondering why it might be that franchising seems to be on the radar more than it was.

By the way, sorry about the corporate jargon in that last sentence! I promise never to run it up the flagpole or push the envelope again!

Anyway, back to the story…

Franchising is being considered by more and more businesses and I think this is for a number of reasons, not least of which is the recent recession.

After more than a decade of good times it’s as though we’ve forgotten about risk in business and the fact that prudence is, sometimes, a very good thing. Having said that, now that we’re coming out of recession (allegedly), people’s thoughts are turning once again to expansion, developing their brand and reaching more and more customers.

The problem is, though, how best to do it? Banks aren’t really lending, even now, and we’re all just a little worried about the mess we’re just climbing out of.

Much has been made in the past of franchising as a lower risk route into business for new business people – with the mistakes already made and the additional support. There’s a famous stat that says 98% of new franchisees are still trading after two years whereas 80% of new businesses are no longer with us!

But now the shoe is on the other foot… or should that be circle has been squared?

It is now beneficial for businesses to expand through the lower risk route of franchising. Assuming that systems and processes are mapped and duplicatable and support can be provided, awarding franchises can get a business out into the market place quickly and efficiently. What’s more, it generates income through Franchise Fee and Royalty and it spreads the risk of expansion by passing an element of that risk to franchisees…

In the unlikely event that a franchisee fails, it is not catastrophic for the franchisor in terms of cash flow and losses.

Of course, the only question that remains in what can be franchised and what can’t be…

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