Ten Reasons Not To Franchise Your Business
Unsure if you should franchise your business? If any of these points apply to you then franchising might not be a viable means of expansion for you.
1) The business is too complex and can’t be easily duplicated
Successful franchising is reliant upon straight forward replication – therefore a business with too many moving parts, that requires extensive training, is likely to experience difficulties.
2) It would be too expensive to develop a supporting infrastructure
Franchising is a low-cost way to expansion, but it’s not a no cost option! If the start-up costs run into the millions, then it is very unlikely that you will attract potential franchisees.
3) The trademark / brand isn’t strong – lack of distinctive features or USP’s
Take a good look at your brand – is it strong? Would
others want to buy into it? What are its unique selling points? If you struggle
to answer these questions, then franchising is unlikely to be a viable means of
expansion.
4) You can’t franchise a concept or a business with little or no trading history
A prospective franchisee will need proof that the
business is profitable and that the proposition works – otherwise why would
they invest their money?
5) You have a controlling nature and would find it hard letting go of the reigns
One of the basic principles of franchising is that
franchisees take on the day to day running of the business in a given location,
if you are not prepared to let others take that control then franchising is not
for you.
6) The business is based on a fad so is not sustainable
Fashions and fads come and go - an example here is
the fish pedicure businesses that briefly flooded the market a few years ago
and just as quickly vanished! For a business to be successfully franchised it
needs longevity and the ability to withstand changes in consumer activity.
7) Franchising will not save a failing business
If your business is experiencing a decrease in profit
and revenue franchising will not turn this around or provide a ‘quick fix’.
Moreover, prospective franchisees will not want to invest in a failing
business.
8) Franchising can be stressful – you need to be comfortable with developing people
Franchising is not for everyone. As a franchisor you
will need to be able to provide ongoing support and training to franchisees,
and also be comfortable in confronting franchisees that are not playing by the
rules and potentially causing damage to your brand.
9) The business lacks nationwide demand – it is too localised or niche
Is demand for your business nationwide? If you have a
brand or product that is very specific to your local area and could not realistically
be rolled out across the country, then your business should not be franchised.
10) Lack of business experience – the directors are not ready to franchise
A lack of experience is a major indicator that a
business is not ready to franchise. The company owners / directors should take
some time to learn and gain experience in the areas that they are weak –
franchising should not be rushed into.
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