If you’re looking to expand your business, franchising your business could be a great option. Growing a company by franchising can offer many benefits—but you need to be aware of the drawbacks, too. To determine whether or not you should franchise your business, we asked members of Young Entrepreneur Council the following question:
What's one tip you have for business owners who are considering franchising their business?
1. Carefully screen potential franchisees
Remember, the folks you bring on will be the face of your business, so you need to be very careful about whom you select. Do they believe in your business? Can they live and breathe your culture every day? And can they be great leaders? The future of your business could be at stake, which is what needs to be on your mind when screening potential franchisees. —Andrew Schrage, Money Crashers Personal Finance
2. Consult a lawyer
It's important to get expert advice before you franchise your company. Franchising is a huge process. You’ll need to set the pricing, create a franchise agreement, determine intellectual property protection, and do so much more. Hiring a lawyer can make all of these steps a lot easier. —Thomas Griffin, OptinMonster
3. Consider the costs
First and foremost, business owners who want to franchise need to consider how much it will cost. Things like purchase costs, inventory, and working capital are all things you need to think about before franchising so you set yourself up for success. —Stephanie Wells, Formidable Forms
4. Have clear policies and processes
One tip for business owners thinking about franchising their company is to have clearly set policies and procedures. Document all of your processes and make sure that they're as flawless as possible. Why? Because then, when franchising your company, it will be easier to replicate an already working model of doing business. —Alfredo Atanacio, Uassist.ME
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5. Have systems for everything
The beauty of a franchise is that you don't need to reinvent the wheel, so there should be turnkey systems for every piece of the operation. These can't be built overnight, so creating and testing the systems over months ensures that you're handing over processes that you know work. Systems make the franchisee more successful and ensure consistent quality. —Kelly Azevedo, She's Got Systems
6. Be mindful of your FICO score
Having a high business credit score is essential as you're likely to incur significant debt in order to open the doors of your first few franchise locations. Small business loans are usually how franchises get off the ground, so being creditworthy is a must for business owners looking to franchise out. The higher your credit, the more favorable the loan terms you'll receive. —Tyler Gallagher, Regal Assets
7. Consider the uniqueness of your business
When franchising your business, there's a chance that it can lose its uniqueness. Your brand will take on a "cookie-cutter" business profile and this may not be the best step for everyone. Do you care about being authentic and unique and standing out? Or are you happy to grow your brand and keep its image streamlined? Based on what matters to you, you'll know whether franchising works for you. —Blair Williams, MemberPress
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