Renowned business strategist Stefan Kazakis explains how to tell if your business is franchise-ready and what to do next.
With the right foundation, franchising your business can be a very effective way of expanding your business and growing your brand quickly, according to Stefan Kazakis.
While franchising has in recent years slowed down from the rapid rates seen in the 1990s to early 2000s, it is an exciting method to grow your business. But the decision to travel down this route is often a more ‘bright shiny light’ driven campaign rather than a well thought out plan. And this in turn ends in failure. However, if done correctly, franchising can be a very effective way of expanding and growing your brand quickly.
For well run businesses, with systems and processes, procedures and rules, franchising will provide benefits and satisfaction for both parties. However, be under no illusion. This is not an easy path to take. Establishing a business model that can be considered for franchising has to be undertaken with education, skill, patience and not surprisingly, capital.
So, how do you know when your business is ready to be considered for franchising? Here are my top seven tips:
While franchising has in recent years slowed down from the rapid rates seen in the 1990s to early 2000s, it is an exciting method to grow your business. But the decision to travel down this route is often a more ‘bright shiny light’ driven campaign rather than a well thought out plan. And this in turn ends in failure. However, if done correctly, franchising can be a very effective way of expanding and growing your brand quickly.
For well run businesses, with systems and processes, procedures and rules, franchising will provide benefits and satisfaction for both parties. However, be under no illusion. This is not an easy path to take. Establishing a business model that can be considered for franchising has to be undertaken with education, skill, patience and not surprisingly, capital.
So, how do you know when your business is ready to be considered for franchising? Here are my top seven tips:
- Proof of concept, establishing a franchise system and preparing it for market can take as long as three years. The business needs to be making a healthy predictable profit – this is non-negotiable.
- Making a positive cash flow without the key/critical staff being present. Having the right management structure is also non-negotiable.
- There needs to be uniqueness, however not extreme uniqueness. The best uniqueness is often found in a customer delight system.
- Your business has a predictable operations procedure with good systems and ‘How to’ manuals for all tasks including the testing and measuring for all activities.
- Has a defined and proven lead generation system delivering leads within a cost per lead budget.
- Has a progressed and defined sales system to ensure a 60% conversion on all leads regardless of the sales skills of the person selling.
- Strong culture of open and honest communication.
- You need to be assertive but fair. You need to be clear on the vision. Who needs to do what by when?
- You will continue to work harder with even greater laser focus. You are now accountable to other business owners who are buying into your vision – being a franchisor is not for the faint hearted.
- Strong ownership of the brand and the ability to share it with a new network of business owners who must and will embrace it as their own. You must be ok with this.
- You will be okay to not have all the greatest ideas in your business, and more importantly you are okay to encourage this.
- You will have taken legal advice and have a Franchise Agreement that has been developed with an authentic reputable franchise development and legal team. It should be noted that the investment for this is a minimum of $70,000.
- A training arm needs to be developed for all franchisees that comprises of internal and external consultants/trainers.
- Having a recruiting system for franchisees that is more about de-selection than selection. You need a much progressed system and track record for saying thanks but no thanks.
