If your business growth has hit a plateau, you may wonder whether scaling’s just not in your future — or whether it’s time to consider a different strategy to grow your small business to the next level. You may be thinking about joining a franchise network and converting your small business into a franchise.
Franchising can offer small to midsize companies like yours several advantages. One is instant brand recognition and trust. That’s not an insubstantial consideration, given that 60% of consumers indicate a strong predisposition toward brand loyalty and that people tend to purchase from companies they already follow online. Aligning with an existing organization can confer upon any franchisee some instant social cachet — and a potential new source of leads.
Another frequent benefit of franchising is gaining access to the franchise network’s established infrastructure of business support, including ready-made training, sales and operational backing, professional marketing materials, and websites. For these reasons, almost two-thirds of aspiring business owners are interested in buying a franchise, versus half who’d consider starting up a business from scratch.
Still, franchising may not be the right decision for you because it could necessitate changes to your procedures or operating systems and requires a willingness to embrace the franchise brand. Before signing with any franchise, you should carefully evaluate the opportunity to make sure it’s the right match for you, your organization, your team, and your business goals. Ready to make a decision? Consider these three essential questions:
1. Are you willing to trade in your legacy software and processes?
Change is difficult, of course — but it can be profitable, too. Consider whether you’re amenable to keeping an open mind when it comes to learning new software programs and operations processes. Franchise owners are often surprised by how much change is involved, especially from a personal perspective. Therefore, you need to be completely invested in the process, comfortable with receiving constructive feedback from the franchisor, and ready to prepare your staff members for the transition.
One way to make this transition less rocky for you as a leader is to evaluate a franchise not just on what it offers, but also on the personality of the leaders. Do you like them? Do you feel a connection with the brand’s history? Feeling personally invested — and finding people your team would like to work with — will help you and your employees build trust with your franchise partners and forge a win-win connection.
2. What does your current market share look like?
Your current market share is an important consideration if you’re planning to take the franchising route, because if you already control a majority of your market or have maxed out your total addressable market, franchising may not be the right path. Even the best franchise in the world won’t push your profits that much farther in that case.
On the other hand, let’s say your market share is low or that the franchise could enable you to expand your offerings significantly. Those would make it worthwhile to turn your small business into a franchise. Again, what you want is a franchise that will help you reach untapped markets or sell additional services to your existing customers.
3. Are you willing to change your company’s name?
Joining a franchise network means you may have to modify or change your corporate name to comply with the franchise brand. If you started your business using your family’s name or you built a modest brand based on a unique origin story, you might struggle with this change.
However, understand that it’s not that the franchisor wants to undermine your spirit or history: The franchisor wants to boost consistency. You may be able to keep some semblance of your original name, depending upon the franchise model and how long your organization has been in business. Talk with franchisors about retaining your local reputation or injecting a specific personality into your offerings, but know that joining a franchise usually means giving up some individuality in exchange for resources, support, and national brand recognition.
Franchising isn’t for every small business, but it’s worth consideration if you want to scale up and need support as you go. Before making the leap, do some homework and give it serious contemplation. You may end up trading in some control, but your business could finally reach that desired zenith.