To Franchise or Not to Franchise Your Retail Business?

By Brian Harris

subway Franchise

You may be a retailer facing the question of whether or not to franchise your business, or expand franchised operations. Either way, you should be congratulated for getting to this point. Your current store or network is in top shape, and you’ve proven there is a market with customers to support your growing business.

Still, deciding whether or not to franchise can be a difficult decision with serious financial repercussions. Looking back on recent years, you’ll recall the proliferation of frozen yogurt and cupcake shops. You’ll also recall that many of these shops closed due to market saturation. Let’s face it. People don’t eat frozen yogurt and cupcakes every day of the week.

Allow us to sprinkle in some additional information that can help you decide whether or not to franchise:

Belief in Your Product or Service. If you have a feeling it’s a niche market that will reach saturation, you might not want to franchise. If you are the business owner – or a potential franchisee — you may choose to wait and then reassess the market.

Territory and Market

Has the market been defined? It is growing or in decline? Perhaps your product or service appeals to a certain age group, so you’ll want to check the demographics of your potential franchised locations. Of course, location and foot traffic is crucial to your franchise.

Understanding the FDD

Like most momentous occasions in life, there’s paperwork involved in franchising a business. One of the most important documents is the Franchise Disclosure Document or FDD, which the Federal Trade Commission requires franchisors to provide to candidates at least 14 days prior to sale.

Training & Support

Franchising is not only a financial commitment, but also a time and resources investment. As you grow the number of locations, your staff will grow exponentially. Suddenly there are a lot of things happening beyond the periphery of your watchful eye. Are you ready to onboard new retail employees? Do you have the means to evaluate employee performance? These are areas you must consider before making the commitment to franchise.

Operational Processes

Without paperless processes, you’ll be hairless in no time. All the challenges of running your business just multiplied with a new location. Can you quickly notify a vendor when there’s an out-of-stock? Can you assign a member of your maintenance staff from a central platform, without an email chain and a game of telephone? What about property inspections and safety audits? The list gets long rather quickly, but these are all things you’ll want to document in order to improve retail operations.

Ability to Share Data

When you find potential franchisees, they’ll want to know your company’s earning capability. They might even ask if you can share your most recent sales report. Don’t wait a week to generate paperwork. Impress future franchisees with your ability to retrieve real-time data on a mobile platform. Show them how issues are reported to management and prioritized in real time.

Remember: Using real-time exception notifications is also a support issue.

A lot of great businesses start with a dream, but it’s the ones with seamless operations and superior communication that thrive.

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