3 Questions To Ask Before Franchising Your Business


Before you even think about franchising, there is one fundamental thing you need to understand about it. Franchising is either an exit strategy option or a growth strategy option; you can look at it both ways.

In general, I think most people tend to think of franchising way too early. Anybody who walks into my office and says they want to franchise usually hits a brick wall the second I ask them my first question…

Do You Have Your Systems Figured Out?

The first thing that you need to create is a system. That’s what people are buying when they buy a franchise; they’re buying a system that works. Not only do you have to design a system that works but you also must prove that it works. Once you can do that, you are ready to start thinking about franchising.

When I say you need to design a system, I mean 100% complete documentation. That means writing down the finest details including where your suppliers are coming from and essentially providing your franchisee with a step-by-step manual on how things need to be done and why. That’s really what a franchisee gets…they get a complete business system in a manual.

Does Your Business Need You?


The other thing critical aspect of determining the potential success of a franchise is whether or not the business needs you to be successful. If the answer is yes then that’s a very difficult business to franchise because you have to sell your franchise to somebody just like you. What you need is a franchise that anybody can run. That is fundamental criteria when creating a great franchise.

I’m sure the owner of the first McDonald’s wasn’t even prepared with his systems when he asked his advisor about franchising but you can be sure he was ready to go by the next meeting. McDonald’s designed a system that allows their owners to run a restaurant without the founder’s personal input and that is one of many pivotal points that makes it a great franchise.

Ask yourself how much vacation you took last year. If the answer is you couldn’t take one because your business would have fallen apart without you, that makes it a very difficult business to sell and an even tougher one to franchise.  To truly be franchisable, your business must be able to run without you.

Are You Successful?

Be honest with yourself and figure out if the success you have achieved with your business would be desirable to others. Now when I say successful, I mean in the financial sense.

If someone invests capital in your franchise, they will need to recover that investment plus their time. If they can’t recover their time and money, why would they ever put money out for your franchise? It’s the cold hard truth that anyone must face if they are serious about franchising.

Do not kid yourself…you’re the one who will pay for it in the end!

Don’t Spread Yourself Too Thin


If you think about the Tim Hortons franchise, one of their requirements is that it has to be your only business. The last time I looked into it, Tim Hortons actually makes franchisees get rid of their other businesses prior to getting a location. They want you to focus hard at the beginning because the business needs a lot of attention to get up and running properly.

Always focus on your current business and don’t spread yourself too thin. If you really want to sell a franchise then get the systems in place, get it operating and make it successful before you think about franchising it.

Make sure your business is pumping consistent profitability because that’s what makes it very easy to franchise. It takes a lot more than just a great idea!

I’ve seen a lot of ideas franchised in my career and aside from the occasional surprise, success always comes down to three key factors:

  1. Having a unique concept.
  2. Generating solid cash flow.
  3. Being the type of business that doesn’t require the long-term involvement of the founder.

Build these factors into your franchise model and perhaps we will see your business featured as the next Canadian franchise success story!

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