If you’ve got a good idea for a business and a model that has been working for a few years, you might wonder about taking things up to the next level and allowing other operators to license the rights to work under your name. Franchising is a great opportunity, but it’s not for everyone. If you’re going to make it work, you need to have the right attitude and resources. Otherwise, you might have great success with a private chain. Plenty of successful entrepreneurs do well without spinning a business into a franchise, but for those who are built for it, this exciting opportunity can be a great way to take your brand national.
Financial Resources for Expansion
If you are going to start taking franchisees, you need to be able to supply them with the branded materials they need for ads, uniforms, and operating supplies. That means having facilities for warehousing and distribution, as well as deciding between outsourcing your manufacturing and building your own plant. It’s a lot cheaper to start by hiring a company to make your stuff, but as the brand matures many franchises bring that manufacturing in-house, creating companies for the purpose of supplying the chain.
Legal Resources for Expansion
Franchise law is its own area of specialization for a reason. Building a business for the purpose of selling franchise rights is complex, and moving from a private chain to a franchise with many operators involves taking on new liabilities. That means your insurance will need to be updated, but so will your legal compliance. It’s not just about avoiding fines, it’s also about protecting you from situations that could harm the brand or financially undermine your investment.
When you have built a business that you’re ready to bring to the next level, franchising can put more locations in more places faster than building a chain you own yourself. The best part is that one doesn’t preclude the other. You can keep putting up corporate-owned locations in addition to granting franchise licenses to new operators.
