8 Questions You Should Ask Yourself Before Franchising Your Business



Deciding to franchise your business is a big step in entrepreneurship and there are many factors to consider before doing so. Aside from making sure your main business has enough funding to support your overall brand, there are legal processes to complete, hiring to make, and branding processes to solidify.

Here, 8 Council for Young Entrepreneurs members point out some specific questions to ask yourself when considering franchising your business and why you should do it.

When thinking about franchising your business, what is one factor to consider first? Why?


1. Is your business profitable enough to attract new franchisees?

Small business owners become blinded by the success of their single location and don’t give a second thought to whether their business is profitable enough to support a franchise model. To start a successful franchise, you must have enough margins to support the franchisee and franchisor. Otherwise, it will be difficult to attract new franchisees. —Shaun Conrad, MyAccountingCourse CPA Preparation

2. Do you have SOPs?

SOPs, or Standard Operating Procedures, are important factors to consider when franchising your business. Having SOPs in place helps ensure that each franchise location follows the same procedures and provides the same level of service. This is important for maintaining a positive brand image and providing a good customer experience. —Pratik Chaskar, spectra

3. What are your financial risks?

You must clearly identify your financial risks before franchising your business. This means taking into account all potential sources of income and expenses, as well as any debts or other liabilities that could affect the business. Doing this analysis up front can help owners better understand the potential financial implications of franchising and make more informed decisions. —Kelly Richardson, Infobrandz

4. How easy is it to replicate your business?

What do people actually buy? Do they buy your processes, logo, recipe or relationships? How easy is it to replicate your business? Understanding what makes your business unique can help strengthen your offer to a potential franchisee. —Chase Williams, Market My Market

5. How do you achieve brand consistency?

Quality control [among franchisees] becomes one of the biggest issues and challenges in franchising your business. You want the [consumer] experience remain the same across all franchises. What happens in one location affects all the others. This requires careful consideration and planning. It means ensuring that each of your franchisees has the tools, resources and knowledge to provide exceptional service and products. — Blair Thomas, eMerchant Broker

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6. Do you understand the regulations surrounding franchises?

One factor to consider first when thinking about franchising your business is the applicable laws and regulations. As a new franchisor, you should learn about the regulations that apply in your respective region, as they may differ from one state or even city to another. So it’s best to do your research first and engage a franchise consultant to walk you through the process. —Stephanie Wells, Formidable shapes

7. Will franchising dilute your brand?

Brand dilution is the biggest concern. While margins and revenue sharing are important, ultimately you want to make sure you’ve set up your franchise agreements in a way that allows your brand to grow and thrive. Otherwise, new partners may present your business in a way that is detrimental to the overall image of your brand, which could hurt your potential in the long run. —Firas Kittaneh, Amerisleep mattress

8. How is the franchise paid?

The first and most obvious factor is cost. You need to establish how much it costs to set up a franchise and how that will be paid for. Most people think that the franchise owner automatically pays for it, but that’s not always true. Many companies have financial systems that help potential franchise owners get started over time with a loan repayment system. —Baruch Labunski, Rank safe

About the author

Council for Young Entrepreneurs (YEC) is an invite-only organization made up of the world’s most successful young entrepreneurs.


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