Those considering starting a franchise or becoming a franchisee should examine their prospective partner as closely as a potential spouse – these agreements can last 30 years, and no one likes divorce.
Franchising is a $700-plus billion industry that features hundreds of thousands of companies from a wide variety of industries. According to the International Franchise Association’s (IFA) 2011 Outlook report, the franchising industry is projected to grow 2.5 percent this year.
Perhaps you already own a concept that you’re considering franchising, or maybe you are interested in joining a franchise system
with an already proven model. The following will take you through the steps to franchising your concept and evaluating what franchise opportunity would be best to pursue.
The biggest mistake potential franchisors make is underestimating the money and work needed.
Franchising Your Concept
Is your concept right for franchising? Take a look at your business – good franchise concepts are a niche, unique and have simplicity. The concept has to be something easy to operate that can be scaled and multiplied quickly. Plus, it has to be a proprietary way of doing business that is different from anybody else. Consider actually becoming a franchisee first or owning your own business. This will help you understand what it’s truly like to
have skin in the game, and what it’s like to do it yourself before teaching others how to do it. The biggest mistake potential franchisors make is drastically underestimating the money and sheer work needed to open a business. A lot of new franchisors coming in are undercapitalized. Typically, it takes double of what you think it will to franchise right. Expect to spend six to 18 months and $100,000 to $200,000 setting up a legal framework with a top-notch franchise lawyer.
Table of Contents for the Digital Edition of Retail Merchandiser - May/June 2012