Franchising is a proven growth strategy to expand your business. But here are three reasons why you shouldn’t franchise your business.
1. SYSTEMS AND UNIT ECONOMICS: You’re not ready. You don’t have the systems in place and the unit level economics that is going to make franchising profitable for your future franchisees. You probably do already have systems in place, but they need to be refined so you can roll them out and properly support your franchisees. Also take a look at your unit level economics and what they would be for franchisees. Factor in the added expenses franchisees will have such as royalties they will be paying to you and paying for any exclusive products and supplies.
2. COMMITMENT AND CAPITAL: Franchise success takes time. You’ll need a 1, 2, 3, 4, 5+ year plan (check out this video about a 5 Year Franchise Success Plan: https://youtu.be/uFx-55Avn8Y). In the first two years, you’re going to be seasoning your franchise brand and work on selling initial franchises organically to individuals who are familiar with your brand. You’re gong to be investing in the franchise development process, sales, and also helping franchisees open, training them, and supporting them. Many times, the first few years of franchising are cash flow negative.
3. HAVING THE WRONG MINDSET: If franchising is not your passion, it’s not for you. The same way that you started your business from the bottom is the same way you will learn and build an amazing franchise system. Take advantage of resources and immerse yourself in franchise sales, broker organizations, and telling your brand story.
SUCCESS COMES DOWN TO YOU, AS A FOUNDER!
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