Should we franchise?
I'm a co-founder of a web design business which mainly helps micro businesses build simple websites. Growth has been consistent over the last couple of years but a little slow. We've developed some 'out of the box' software which, in theory, allows virtually anyone to use (and sell) our product and we're considering franchising as a route to grow the business. However, my co-founder and I are both concerned about having enough time (as well as authority and confidence) to manage a network of franchisees as well as our core business. What safeguards should I build into our expansion model to make the franchise route successful for us and what are the most common pitfalls to be aware of?
A. Nigel Botterill writes:
You’re right to be concerned about the time – and resources – needed to effectively manage a large network of franchisees. Once you go down that route your business changes and you become a recruiter and supporter of franchisees rather than a web design business, which will be a big change for you. You’ll definitely need additional resource, either to run your existing business, or the franchise. You and your co-founder won’t be able to do both properly on your own.
I don’t think you need to worry about ‘authority’ or ‘confidence’ – you’ve got the track record and there’s plenty of help available from people who have successfully franchised businesses before, so these are red-herrings. ¬You do however need to make sure you that fully understand what is involved in franchising your business.
The key thing to be aware of is that the skills required to find good franchisees and develop them are very different from the ones you’ll have used to build websites and develop software. (By the way, note use of the words ‘good franchisees’ there – because bad franchisees are way more trouble than they’re worth; they sap your time, your energy and they can damage your brand, so your recruitment processes are really important.) You need to be clear on what support you’re going to provide to your franchisees and make sure that you have the resources in place to deliver.
Before you get anywhere near your first franchisee, of course, you’ll have to build your franchise. This will involve developing the systems and processes that your franchisees will use, pulling together your Franchise Agreement (for which you definitely need a specialist franchise lawyer) and getting clear marketing plans in place. This will involve a lot of work, and it will also cost money. You’ll need a five figure sum as a minimum, and if you hire help from a specialist franchise company then that figure will rise considerably.
The British Franchise Association runs regular seminars for business owners like you who are considering franchising and I recommend that you go on one of those. It will help you get real clarity as to whether franchising is right for you, and if so exactly how to go about it. Full details are on the BFA website.
Nigel Botterill has built five separate businesses from scratch in five years, most notably local website franchise thebestof. He now helps other business owners through his Entrepreneurs Circle.