When you get to a certain stage in business, you begin to look to the next level. You’re hitting your major targets and goals. The money is flowing in steadily. Life is good! But, naturally, you’re always looking further. You’re an entrepreneur, after all. Every good business owner is always planning their next move. After a certain point, the only viable option is franchising the business. That means setting up new sub-divisions or new stores and locations. You remain in control of the umbrella company, but a new manager, or franchisee will take control of the individual branch.
Scaling up your business can feel terrifying. Not only that, but franchising means handing over power to new hands. For that reason, it’s incredibly important to take it slow, and make the right decisions every step of the way. It sounds daunting, but the potential benefits are enormous. You take the lion’s share of every franchised branch, while extending your reach and brand.
As you would expect, growing your business should take place in slow movements and steps. We recently helped a company make this big leap, so we’ve been here before! If this is something you’re thinking about, follow these steps, and you’ll have your empire in no time.
Understand your business backwards
Before you hand over the management and control of multiple branches, you need to understand every aspect of the business. There will be endless reams of paperwork and legal issues to go through before you complete. And that requires extensive knowledge of the inner-workings. Not only that, but you need the confidence to hand over control to franchisees. To do that, you’ll have to impart wisdom and a strict business plan to all corners of the company. Only with a full knowledge of the business can you begin to expand.
Hire a franchise consultant
One of the biggest mistakes in franchising is going it alone. This is an incredibly complex process involving difficult legal procedures. It’s a huge restructure of your business that includes accounts and legal contracts. Your first job is to hire a good solicitor who specialises in these expansions. They’ll take you through the process, and outline the issues you’ll face along the way.
Look at successful case studies
Successful business owners always look to previous studies for inspiration and guidance. Always look to those who have trodden the path ahead of you. Spot their big mistakes and analyse what went well for them. It will shine light on the process ahead, and introduce you to the potential pitfalls. One big franchise success story is CertaPro. Their umbrella franchise oversees 420 units of painting service and home improvements. Look into their history and understand how they built the company.
Expand at a sensible rate
We know that you’ve got big ideas and grand plans. Every entrepreneur looks to the stars. But, it’s crucial that you take small steps to get there. Expanding too fast is the downfall of many potential franchises. You can’t go from one store to 100 in one fell swoop. The franchising process is like any other in business. Take it slow, and test the waters. Once you’ve proved the system works, then you can apply it on a larger scale. Scaling up is all about natural growth. Make sure your foundations are strong enough. And, make sure there is demand for your product or business.
Screen all potential franchisees
After making the decision to expand, lots of owners get excited when a franchisee shows interest. However, it’s really important that you don’t hand over the keys to the first excitable entrepreneur that comes your way. Take the time to screen your potential franchisees. What is their experience and qualifications? Do they understand your company and your product? Most importantly, do you connect with them? Will they operate under your umbrella with care and attention? Don’t rush to fill your new branches with eager franchisees. Take your time, and screen them correctly.
Balance their restrictions and freedoms
Once your first franchisee is in place, now it’s time to build your working relationship. It’s important to set clear restrictions and freedoms. They operate under your company, but they’re still in charge of that particular branch. There’s a fine balance to be struck here. They answer to you, but they’re not an employee. A good franchise owner knows how to step back and trusts their managers to run their branch. Don’t micro-manage; learn to delegate. But do put restrictions in writing. Make a clear line in the sand and shake hands on an agreement.
Support the franchisee
Although it’s crucial to give your franchisees freedom to run their branch, offer support where needed. Make the effort to meet each and every one. Visit your new branches and understand the scope of your new company. Offer guidance and support to every franchisee in the form of training and literature. If you have a grand vision for the company, make sure your franchisees are working towards the same thing. Communicate and ask for regular feedback. Again, it’s all about finding that perfect balance.
A final note on capital
Before we leave you to build your empire, we must impress the scale of this venture you’re about to undertake. Franchising your business is an enormous leap forward. Most of the advisors we spoke to suggest putting aside $100,000 as startup capital. You’ll need to fund the creation of a new branch, new stock, and wages for employees. There are legal costs and accountancy fees to restructure your business. There are marketing costs to introduce your business to a new location. But, as they say in finance, you’ve got to spend money to make money! If successful, this investment will see a huge return as your company extends its reach.
Franchising is the first step to creating an empire. If you lie awake at night imagining hundreds of units across the country, this is the route you’re looking for. Just remember to scale up slowly, and take things one step at a time. Good luck!