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Why a franchise opportunity may not be right for you…

Can you franchise your business? Is franchising the right route to take for your business? As rents and rates rise in the main shopping areas & supermarkets take a greater share of consumer spending what are the advantages and disadvantages of franchising your business.

If a business has managed to find a niche and can maintain a high profit margin through the ups and downs in the business cycle, then it might be possible to franchise. Is the business model easily explained? Can somebody who has no experience in this business be taught the specialised knowledge required to manage and make a profit in their town or city?

If the answer is yes, then franchising could be very lucrative. Once the decision has been made to franchise the business, then it is imperative that the right person is found. A big mistake that a lot of franchisors make is to take the first person who comes to them with some money. Finding the right franchisee can be time consuming and very expensive.

Once the right franchisees have been acquired, then you can expand your model relatively quickly. Once you achieve critical mass, then recruiting new franchisees become easier as the word gets around that your business model works.

Once you have reached critical mass, then the whole group benefits from higher purchasing power. National marketing costs can then be spread out amongst the franchisees, making it relatively inexpensive for each one.

You can then exploit your niche and expand in your chosen market very quickly. Your brand name and logo is then known by everyone.

Franchising an existing national business can be a quick way of disposing your retail outlets and scaling down your business commitments. It can be difficult selling the group as a whole due to the size and value. This route can be ideal for business owners who are looking forward to retiring soon.

Assuming that you have the correct business model, with franchising you can:

Expand your business and brand very quickly

Compete with larger players due to economies of scale

Raise money for expanding your business

Secure a residual income stream

Enter new markets without risking your capital

Make sure that you take professional advice before deciding to follow the franchising route.

About the Author: Naz Daud

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