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Is your business ready to franchise?

By Andrew Skinner - 18 Feb 2020

People with successful businesses often consider a range of options for expanding their operation. Franchising is becoming an increasingly popular option for well-established businesses operating in a local market, but wishing to expand regionally or nationally.

What is franchising?

In franchising, the owner of a business retains all of the intellectual property and know-how in their business system and authorises independent companies (known as franchisees) to operate the business system in a particular territory.  There are three basic features:

  • ownership by the franchisor of a name and distinctive business system;
  • the grant of a licence to franchisees permitting the use of such name and business system, together with controls on how to operate the business;
  • payment by the franchisee of a royalty fee on income earned to the franchisor for the rights to use the franchise system.

Am I ready?

Franchising provides an opportunity for the owner of a business to:

  • expand the brand and customer base without having to provide all of the capital and personnel for that expansion
  • move away from the day to day operational running of the business and move more into a system development and mentoring role.

In deciding whether to franchise your business you need to consider a number of factors such as:

  • is the business to be franchised well established and profitable? Franchisees will expect the business system to be robust and profitable and will ask questions of the franchisor as to the financial strength of the business;
  • does your business have a unique brand or way of operating that differentiates the business from the other competitors? Franchisees will be attracted to businesses that have a strong brand in the market and a good reputation for delivering results;
  • is your method of operating easily taught to others and able to be captured in a business manual? The power of franchising is the ability to replicate the same business system and provide the same service to customers. During the start-up phase for franchising, a lot of time will be spent documenting the system method and the way of doing business.

Next Steps

If you are interested in exploring whether franchising is the right option for your business then please contact Andrew Skinner to discuss.


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