What To Consider Before Franchising Your Business

Friday, September 13, 2019

As a business owner, one of your dreams may be to see your brand across multiple stores in every state, or even spanning the globe. But, how do you know when it's time to start franchising? Starting a franchise business might be the ultimate way to grow as a company, but it comes with risks and needs to be a product of careful planning and consideration.Branching out your company into franchises is a big decision. Not every company or every owner is ready for the big leap of letting investors represent their brands. Although the initial buy-in and financing required are often enough of an initiative to investors to work their hardest,there is never a guarantee that expanding into franchising will work.The ultimate goal is to gain a greater reach for your brand and company. If you have the financial support that you need from a reputable investment banking firm, great advice from your advisors and interest from investors, franchising might be a good move for you. Before you get to that point you will need to consider several things to determine if your company is ready for a large expansion.

Do You Have A Proven Model?
Even if you currently only have a few locations, you will need to prove to potential investors that your business model actually works. A history of proven success at each location can help you to demonstrate to potential investors that you have something solid to offer. Consistent performance and branding that goes across all sectors need to be in place before investors can trust the franchise is workable.

Do You Have The Required Capital?
Franchise investors are the ones that take on the largest part of the investment to open a new location. However, as an owner, you will still need to have money behind your plan. Training materials and a full marketing plan to assist in a smooth transition will be up to you to provide.Each time a franchise opens, you will need to make sure that the process is seamless to maintain your brand strength.

Can You Draw In Investors?
Without being able to pique the interest of investors, your franchise dreams will quickly falter.Franchise buyers want to find companies that have lasting relevance, a high level of credibility and strong brand strength. Younger investors may even be interested in your charitable efforts as they want to support a philanthropic brand. Smart investors will want to know that they are making a wise investment that is less of a risk and more of a strong choice.

Can You Promise Returns?
The amount of potential return that you can promise a potential investor is the greatest part of your sales pitch. Investors have no interest in putting their time and money into anything that is not going to bring them profits. You need to sit down with your financial advisors and your franchise planning team and produce some solid figures that you can entice investors with.


Conclusion

Considering the expansion of your business is an exciting possibility, but not one to be made lightly. Opening franchised locations should only be attempted when the business and brand are able to support that kind of lateral move. Creating a global enterprise takes planning and perfect timing to really work to yours and your potential investors' advantage.

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