Growing your Business via Franchising – Are you Franchise Ready?

You started your own business and it was an exciting affair, especially since, nothing could beat the thrill of being your own boss. You have then set the systems in place, figured out what works and what doesn’t, your business is now bringing in regular returns and there are people knocking on your door asking to franchise your business.

You want to grow your business but not sure what is the best direction. There are various ways to go about growing your business.

1) You could raise your own funds and open more outlets by yourself

2) You could invite other parties to invest in a more aggressive growth strategy

3) You could knuckle down and build more value into your brand by franchising your brand before inviting more investors. There are many advantages and disadvantages for the various strategies of growth but if you choose to grow your business via franchising, do continue to read.

But first, what is franchising?

Franchising can be defined as giving the right to use your business’ successful functional model and brand for a prescribed period of time to a second party while receiving a payment for the use of it. It is also a recognised cost effective business development approach that has proven to deliver fast growth with debatably reduced risk. Franchising also lets you keep the operational control of all your franchised outlets for consistency.

Why Franchising?

There are 3 main benefits to growing your business via franchising.


As opposed to expanding via corporate-owned outlets, franchising out will not involve you investing to build every outlet. Franchisees will invest their own capital to fund the investment, they will pay a franchise fee to gain your know-how and will also be paying a recurring royalty fee over the duration of the franchise term.


There is a time for building growth momentum and opening corporate outlets may take longer than desired. Franchising is a great way to grow your business in a shorter amount of time because various parties (franchisees) are working on the development of the business in different territories. The daily operations of the outlet are left to the franchisees. Although as a franchisor, you need to offer management support to the franchisee to set up the business, training to run it, regular audits to ensure compliance, it still allows you to focus energies in developing the brand across various territories simultaneously.

Vested Stakeholders

As the franchisor, you will only need a small core organisation with a few highly experienced personnel to manage the franchise. The staff that is needed for the day to day operations of the outlets are the responsibility of the franchisee. In countries where hiring qualified staff is a challenge or micromanaging is important, having franchisees manage the human resources locally is far more efficient and cost-effective.

When is the Right Time to Franchise?

Here are a few parameters that you must evaluate your brand on before deciding to franchise.

Brand Identity

At the centre of any good franchise operation is the brand’s identity. Franchisors must develop the brand well enough to gain market recognition because people buy a product or a service depending on how much they can relate to it. There must also be a proven track record of the brand’s success in the market.

Sales Proposal

You must ensure that your business has a clear and easily communicable sales proposition before you start to look for franchisees. Price, quality, service, logistics, operations and anything else that you want to include in the proposition needs to be reliably deliverable.

Healthy Revenue Model

Franchising is NOT a Hail Mary for failing business owners seeking a last-ditch effort to grow their business. A franchise is only attractive if the business is making a healthy Revenue and Net Profit. Building a franchise costs money, time and effort.

Documented Operations Processes

One of the key reasons franchisees are willing to invest in a franchise is so as to expedite their business growth by leveraging on the know-how of a franchisor through clearly documented and proven business operations processes for creating or delivering the service or product. Therefore, Having a formally and professionally documented Standard Operations Protocol (SOP) is critical in successful franchising.

Replicable Business Model

Your company must already be making decisions and be implementing activities consistently based on agreed methods of business process management. This is important because, in the end, franchisees are not buying your product or service but they are buying a process by which your brand can be run.

Sound Franchise Strategy

The success of the franchise relies on a well thought through and well-strategized franchise strategy. Too often Franchisors underestimate the importance of a franchise strategy and its implementation. Investing careful thought, research and strategy modelling can be all the difference between a franchise that has protected its intellectual property whilst exploiting it and one that has given away intellectual property without maximising its returns.