Franchising your business is one of the easiest and most efficient ways to expand your business nationwide. Most local business owners prefer this way to make their local business national. But well, there’re a few things you should consider before franchising your brand. It may allow others to run their businesses under your brand, still, you should ensure that your brand is ready for it.
Franchising is easy when you’ve considered all the facts. Yet, the failure rate for franchising is as high as 50% and as low as 20%. Thus, you must ensure that you aren’t making any mistakes when you are planning to franchise your brand.
Wondering how? Let’s discuss the common franchise mistakes in the following article.
What you should avoid when franchising your brand?
Franchising is indeed a great way to expand your brand across the country, but there’re plenty of things you should consider beforehand. Yet, most rookie franchisors fall for these mistakes while franchising their brands. Making the following mistakes can lead to the failure of your franchises,
- Most franchisors think that it’s their franchisees’ responsibility to gather the capital for franchises. Well, it’s true. But you’ll also need sufficient capital to franchise the brand. You will have to support and train your franchisees to help them learn more about your brand. Hence, starting a franchise model without sufficient funding is a grave mistake.
- If you’re planning to draft the Franchise Disclosure Document (FDD), Franchise Agreement (FA) and Operations Manual (OM) yourself, then it’d be a mistake. As per the latest federal and state law, you can’t sell your franchises to someone without these. Hence, it’s a must to hire a proficient franchise lawyer to draft your franchise-related legal paper.
- If you’ve got other franchisees, you must ensure that they’re happy working with you. Ask them how they’re doing and if they need any support from you. Most franchisees look for this aspect when investing in a local brand. Also, doing this can strengthen the franchisor-franchisees relationship and make your brand popular. Not considering your past franchise partner can lead to failure.
- Thinking that your franchise model can survive anywhere you want can be a huge mistake. Your local brand may have a huge popularity within your community, but it doesn’t mean that they’ve got the same everywhere. You should check if your local brand is that popular outside your community or not. If not, then you must focus on your brand marketing and process before franchising it. Also, consider that the areas you’re choosing for franchises have equal demand for your brand.
- Profitability is also a vital factor for franchising your brand. If the profit of your local brand isn’t that great, you shouldn’t think of franchising it. ‘Potential’ franchisees would usually like to invest in a profitable business model. Hence, it’s a must.
- If you think that anyone can run your franchises, you’re wrong. Hiring the right people is a must when franchising your local business. Even though your friends or family members look promising or encouraging, it doesn’t mean that they’re fit to run the franchise model. Ensure to hire people who don’t only think about getting richer but are also interested in growing with you.
- Last, ensure that your business model is replicable and understandable by the franchisees. If it can’t be run by others, then you should never go after franchising it. Ensure that your business model is scalable and can be run even without your presence. You should consult with an adept consultant for this if needed.
Final thought,
Franchising your business may seem easy, but it isn’t. There’re tonnes of things that you should consider before expanding your local brand nationwide. Without that, you can risk your franchise model to fail. We hope this blog post can help you avoid making those mistakes beforehand.