April 25, 2019 | By Mason Roberts
Deciding whether or not to franchise your small business is a big step in your career. You have a successful small business, and you are scared to take it to the next level in the corporate world. You might not know what to expect when franchising. What if it affects your business negatively? But what if it brings your business more revenue than ever before?
Determining Whether or Not a Franchise Is Right for You
It can be difficult to decide which direction is best, but the franchising pros and cons can help you decide. First, let’s take a look at the basics of franchising, and what to expect.
What Is Franchising?
Franchising is fairly easy to understand. It doesn't involve countless people pulling you every which way as the business owner. In truth, there are only two main parties involved in the process. One is the franchisor, and the other the franchisee. It's important that these the main parts of the process work off each other well, so if you're trying to become a well-oiled franchised machine, you'll work very closely with your other part.
What is the franchisor there for? The franchisor is there to help the franchisee with the structure and support necessary to help them both succeed. They're responsible for letting their business grow. They are who you would look to for the services that make your business run, as well as training for such services. All in all, they help your small business dreams become something much bigger.
So, what is the franchisee responsible for? They pay the franchisor to sell their products and services in their name, and name recognition and training are vital for a business to succeed. They pay for their products as well as their services to help them turn more of an immediate profit than you might see getting your own small business off the ground without the proper training and marketing support.
Are There Different Types Of Franchises To Choose From?
All across the country, there are thousands of businesses ripe for the picking, just waiting to be opened. Research what is available for you to take advantage of, and see if opening a new location can help you and your franchisor reach new communities. Maybe you could open a restaurant from your favorite chain, or perhaps get your neighborhood in shape with a fitness franchise. Find out what your community could use more of that you're really passionate about, review your options, and take the time to do your research. Looking into the different options you have at your fingertips will help you realize just how much is out there that could be your calling.
If you enjoy cooking and being in the kitchen, taking interest in franchising a restaurant might be right for you. It can be very rewarding to do something you are extremely passionate about for a living. Also, you have to look into the cost of the franchising the kind of business you're interested in. For example, if you are interested in franchising a McDonald’s, more than likely, it's going to be extremely expensive and competitive. With this in mind, franchising a small business could be significantly less expensive, and might be the right choice for you. Lastly, some businesses will give you more freedom than others, so be careful choosing who you want to work with. It's not fun being your own boss if you have someone micromanaging everything you do with your business!
Pros of Franchising
Very Invested Partners
Whether you are the franchisor or the franchisee, you are bound to have an invested partner who will work hard. They are either putting their business on the line or their well earned money, both affecting their hard earned livelihoods. This means, they have a lot writing on this franchise working out. They are will be more dedicated to you than the employees in said business.
Growth in Your Business
Your business is ready to grow now for several reasons. One big reason is the capital you have will come into once franchising your business. The extra cash you come into once your franchise takes off will help you grow your business further. That means you can open more franchises than just one. This can be a multiple franchise at a time business plan. It will keep you extra busy, but likely will put more cash in your pockets. Lastly, you’ll have more experienced business people on your team, which could help your business get on the right track because it's a track they've been on many times before!
Increase Of Sales And Profits
With the growth of a small business, comes a growth of sales. It's just makes sense right? If you choose to franchise your business, opening several across the country, you should expect to see a spike in sales, especially if your marketing team is unstoppable.
Cons of Franchising
Surrendering Some Control
If you're a business owner and you have chosen to franchise your business, you should expect a change in the control you have in your establishment. You're bringing in a partner who is investing their own capital to help your business succeed, more often than not, they will have some suggestions. This does not mean they will be completely ridiculous opinions or that they will change your business completely, but you should expect some loss of power when franchising.
Initial Costs
Like a lot of things in life, franchising comes at a cost. There will be upfront cost to invest into this franchising plan. The cost will go into planning the growth of your business, like models and advertisements. This can greatly affect how you live for a while, but it also can be worth it. It is smart to think the cost over before deciding on anything.
Challenges To Change Your Business
Once you have franchised your business, it is hard to bring new innovations into the mix. If you owned your own business, calling the shots for every big picture decision, it is much easier try to evolve your business. Once you franchise, you're not the only one making big decisions anymore. If you want to make changes to the business, you'll have to consult with your newly found partners.
Final Thoughts
There are different things to consider when figuring out what business is best for you. First off, explore the industries that are available to you. You may like one more than the other, and that could make all the difference when it comes to promoting your product, so make sure you choose an industry you'll enjoy being a part of. Be sure to consider both which businesses might be most profitable and which have a lower barrier to entry you can handle without straining your finances to stay afloat.
