7 myths about franchising your business
If you are considering franchising your business, you may be researching ‘how to franchise my business’ and feel overwhelmed with the information you find. Unfortunately, there is a lot of misinformation online that can give business owners the wrong information about how to franchise their business. To ensure there is complete clarity, in this blog we debunk 7 myths about franchising a business.
Myth 1: You need to be a big business, like McDonald’s, in order to be a franchise
While McDonald’s is a very successful franchise model, it is untrue that a business must be considered a large or corporate business in order to be a franchise. Businesses of all sizes can become franchises and there are no regulations about what small businesses can and can’t be franchises. For example, beauty salons, pet sitting businesses and cleaning businesses can all become franchises.
Myth 2: You will lose control over your business if you become a franchise
Some business owners are concerned that if they franchise their business, they will lose control over the company they have worked so hard to build. Before you trust a franchisee to open a new franchise of your business, you can create a strict contract that ensures certain standards and requirements are fulfilled in your franchise. This ensures that you retain control over the quality of your business and can continue to control certain elements of the franchise.
Myth 3: You must be in business for 10+ years before you can become a franchise
There is no time limit a business must fulfil before they can become a franchise. You must, however, be confident your business model is successful and profitable before you consider becoming a franchise, but this can be proven in a much shorter time-frame than 10 years. If your business has been producing profits for 2-3 years stably, this is a good indication your business is ready to become a franchise.
Myth 4: Becoming a franchise is expensive
Some businesses are mistakenly told that becoming a franchise is expensive and can result in a business losing money due to legal costs. In reality, however, becoming a franchise is an excellent way to boost the cash flow of a business. For example, a business will receive the up-front cost of a franchisee buying the right to a franchise, and then receive additional income based on a percentage of the franchise’s earnings. These financial benefits will significantly outweigh any initial costs of becoming a franchise.
Myth 5: It is easier to expand a business internally than becoming a franchise
If you are a business owner, you may be deciding between opening a new location for your business yourself or franchising your business. Franchising your business is often the easier option, as you will not have to budget for the upfront costs of starting a new business yourself. Franchising your business will also allow you to expand on a much greater scale than you may have been able to on your own, as you will be able to welcome investment offers from multiple franchisees.
Myth 6: Franchising your business can result in you losing customers to a new franchise
On the contrary, instead of losing customers, becoming a franchisee will allow you to serve a greater number of customers. If you are concerned about a new franchise taking your current customers, you can include geographical restrictions within your franchisee contract that prevents a new franchise from setting up close to your business and potentially poaching your customers. This will also prevent other franchises from setting up too close to one another and potentially harming their respective franchises.
Myth 7: A franchise is guaranteed to succeed
Unfortunately, in life, there are no guarantees and you will not be able to guarantee that franchising your business will be successful. You can, however, give your business the best chance of being successful by working with expert franchise consultants and completing a series of tasks. For example, you must create a franchise operations manual that provides a franchisee with tips and tricks for how to run their franchise in the most successful way.
As previously stated, there is no guarantee that a franchise will fail, but compared to start-up businesses which have a failure rate of 50% within their first year, franchises are must more stable as they are based on an existing and successful business model.
Contact UK Franchise Association
If you are considering franchising your business, contact Quality Franchise Association UK. As franchise experts, we can offer our consultancy services and help you put your business in the best position to become a successful franchise. We understand that this can be an overwhelming time, so if you have any questions about how to turn your business into a franchise, do not hesitate to ask us any questions or queries.