What is a franchise, anyway?
A franchise is a type of business license.
A franchise business is a business in which the owners, or “franchisors,” sell the rights to their business logo, name, and model to third party retail outlets, owned by independent, third party operators, called “franchisees.”
The franchisors determine what products or services will be offered by the franchisees, who must do business under the same name brand, trademark, support, and operating business model as the original business. The franchisee retains control over human resources, employment standards, and best practices.
Franchises are extremely common nowadays – and you see them everywhere.
- 7-Eleven Inc.
- Dunkin’ Donuts
- The UPS Store
- Jimmy John’s Gourmet Sandwiches
Franchising allows businesses to grow rapidly, and it’s a great way to stay financially conscious, too!
The primary barrier to expansion that today’s entrepreneur faces is lack of capital. And franchising allows companies to expand without the risk of debt or the cost of equity. Since franchisees provide the initial investment at the unit level, franchising allows for expansion with minimal capital investment on the part of the franchisor. In addition, since it’s the franchisee, and not the franchisor, who signs the lease and commits to various service contracts, franchising allows for expansion with virtually no contingent liability, thus greatly reducing a franchisor’s risk.
Franchising can be a great way to help your business grow, and franchise business coaching can help you achieve your goals! But first you need to consider a few things before taking the plunge.
Franchising is about relationships.
Franchising is not just about legal requirements – it’s all about relationships, specifically those between the franchisor and franchisees. It’s important to understand how to build a solid rapport with your franchisees. You’ll want to:
- establish initial rules and expectations;
- make regular attempts to check in; and
- get involved!
In a 2014 survey by Franchise Business Review on franchisees’ relationship with their franchisors, it was determined:
- 90 percent enjoy operating their business,
- 88 percent of franchisees enjoy being part of their organization,
- 85 percent feel positive about their affiliation with their franchisor,
- 83 percent respect their franchisor,
- 80 percent feel their franchisor operates with a high level of honesty,
- 78 percent would recommend their franchise brand to others, and
- 73 percent would “Do it all over again” if they had the option.
Your business must be systemized.
In order to start a franchise, it’s important to first have your original business on solid ground. Ask yourself the following questions:
- Is your business model proven to be successful?
- What’s your track record of success over time?
- Do you have a good reputation in your community?
- Are there systems in place that can be easily replicated?
The stronger your business already is, the better. If you’re having problems, opening up a franchise won’t solve them. Tackle your issues in your current location first before opening up any franchises. Franchise business coaching is a great way to solve any issues you may have while also looking toward the future.
Franchise Business Coaching Can Help Your Business Grow
If you’re a franchise or considering franchising, contact experienced franchise business coaching expert Doug Winnie today! His knowledge and experience coaching businesses all over the Houston area can give you the tools you need to grow and reach your goals! Contact him today for a free coaching session!
Should You Franchise Your Business? | Business Coach Doug Winnie – Houston, TX