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.


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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