Magazine article Management Today

Crash Course: Franchising Your Business. (A Section for Entrepreneurs)

Magazine article Management Today

Crash Course: Franchising Your Business. (A Section for Entrepreneurs)

Article excerpt

Your business is a great idea, but it could be much bigger. Trouble is, you haven't got the resources to expand in the way you'd like. So why not franchise it, and watch the cash roll in as others pay you for the privilege of promoting your brand? It hasn't done McDonald's any harm, But is that what franchising is really about?

GET ESTABLISHED. 'You should have a proven idea that works,' says Phil Atherton, head of franchising at NatWest. 'Your business should have been up and running for at least two years, and you should have a brand that is recognised.' Without a track record you will struggle to attract suitable franchisees.

CONSIDER YOUR MOTIVES. Good reasons to franchise your business are to speed up expansion, to take you into untested territories --for example, abroad -- and to bring in capital from outside. A bad reason is trying to rescue a failing business.

THINK REPLICATION. To succeed as a franchise, a business must be easily replicable. If your business depends on the unique skills of one or two individuals, or if it cannot be readily enshrined in a set of operations manuals, it may not work.

SET UP A PILOT. Test the concept over at least a year, perhaps by converting an existing outlet into a franchise. 'A comprehensive pilot operation will ensure the right strategy, highlight problem areas and let the franchisor finalise the package,' says Simon Wise, deputy director of the British Franchise Association.

BE PREPARED TO INVEST. Setting up a franchise will require management time and financial investment. Expect to wait several years before seeing a return. And make sure the core business doesn't suffer as management takes its eye off the ball.

CALL ADVISERS 'R' US. Even if you don't use franchising consultants, you will certainly need the help of specialist lawyers. …

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