The top 5 reasons to franchise your business

The top 5 reasons to franchise your business
Tags: Business Strategy and Profitability, Commentary, Financial Management, Franchising & Growth
January 5, 2012

If you are an entrepreneur and you have one, two or even three operations, why should you be thinking about franchising? There are many reasons, but here are the top 5:

I have a brand that I want to expand but lack the capital to do it by myself. Franchising provides you with the vehicle to expand using the capital of others, your franchisees.
I want to expand rapidly. Franchising provides you with the ability to grow faster than if you opened units on your own.
I don’t have the human resources to open units on my own. As a franchisor, that is not your responsibility, it is the franchisee who has to staff each location, not the franchisor.
There is a great deal of competition in my “space” and I need to move my brand out. Franchising will provide the speed to market necessary to join the space and be competitive in your marketplace.
I need an exit strategy, how can I sell my company with only a few company owned units? Franchisors have a open path to exit by selling the company or even going public, whereas a small company owned system does not have this capability.

Franchising provides the vehicle to accomplish all of the five items above. In my book, "So You Want To Franchise Your Business," I go into greater detail on what the components of a franchise program are. It starts with the legal documents, like the disclosure document and the agreements; it includes a financial statement of the franchising company, a detailed operations manual and marketing materials, including a website that contains a section devoted to franchising.

The negatives to franchising your business are few and are outweighed by the overall benefits of what can be accomplished with the franchise model. While there are costs associated with putting together a franchise program, these costs are minimal in the grand scheme of growing a brand into a national chain.

Reader Comments

Lori Tselikis

about 3 months ago

How does one individual introduce an innovative concept in the Restaurant industry? It's an untouched market, trendy! How would I protect this idea and find an investor?
Harold Kestenbaum

about 3 months ago

First, ideas are not usually prtectable. you would have to invest the time, effort and energy to build your prototype and then protect that. Finding an investor is much easier once you have built your prototype. Finding one to finance the prototype based on an idea, is very difficult to do. you would need a professional business plan, with projections in order to get an "angel" investor interested. I hope this helps.