Suitability to franchise

Growth pictureNot every business is suitable to franchise. For example, if the business is reliant on one geographic location, or on a particular individual, then it may not be able to be replicated. If the business is financially unsound, or not profitable, then you should not consider franchising until the core business has been turned around. If the business has not yet been established and proven, then you will be too early to franchise because franchising only works ethically if you franchise a successful business. You can not franchise a concept alone. Your franchisees should be replicating your success by using your methods and trade secrets, they should not be guinea pigs to see if the business can succeed.

See our Take the Test section to answer questions to ascertain whether in principle your business may be suitable to franchise. Even if it is not suitable at present, please contact us and we can advise you on recommended steps to take from the outset if you intend to franchise the business in the future.

Is franchising right for you?

Franchising can be an excellent method of expansion, and can lead to significant financial rewards for the franchisor. However, it is not a "get-rich-quick" scheme, and no ethical franchisor would consider making money from the sales of franchises themselves (the upfront fee is mainly to cover costs). Instead, your success should come from the franchisees' success as you help them to expand the business.

To franchise successfully, you should consider not only the suitability of your business, but whether it is right for you personally. You will be expanding your business and will need to combine the role of running your expanding business with recruiting, training, supporting and managing franchisees. This in turn may lead to you having to recruit personnel or take on additional facilities. In order to be a successful franchisor, you will need to be comfortable being in control and managing people, including dealing with difficult situations. Many franchisors enjoy their role and the rewards from franchising, but you should be honest with yourself as to whether it is what you want.

It is worth considering that franchising is a one-way ticket. After you have taken on franchisees, you can not change your mind and therefore you need to be sure before you proceed. Franchise Generator can help you to consider your exit strategy (for example sale of the franchisor business) from the outset. If franchising is not suitable for your business, there may be alternative structures (see our Alternatives section) to help you to expand your business.