Your cash register is ringing. You added 2 more employees last month. Your second location is almost ready for a full time manager.Your regu
Your cash register is ringing. You added 2 more employees last month. Your second location is almost ready for a full time manager.Your regular customers are asking you when you're going to "franchise" your business. Should you?
I get my share of calls from small business owners who feel that they are ready to franchise their businesses. One of the more memorable ones was from an Ohio pizza restaurant owner. The gentleman who called asked me if I was interested in helping him develop his franchise.I did my usual poking and prodding, trying to determine if he may have something that shouts "Franchise Me!"Here are the five questions I asked him:
1. What is your USP? (Unique Selling Proposition) 2. How many stores do you have up and running? 3. Have you been documenting all of your procedures, so an operations manual can be written up fairly easily? 4. Why do you want to franchise your business? 5. Do you have funds readily available?
Here were his answers: 1. "Our sauce. It was my Great Grandmother's recipe, and it is the best in town!" 2. "We only have the one shop." 3. "The procedures are pretty much in my head." 4. "I want to make lots of money." 5. "I should be able to get enough money when it comes time."
When I do classes and seminars on franchising, I always share the answer to the first question with the audience. Our Sauce???Maybe to the Great Grandson, the sauce is the best -- and rightly so. I completely understand. I will even go out on a limb and assume that their sauce is the best in town, if a poll were to be taken. But is Sal's Great Grandmother's sauce the Unique Selling Proposition? Wouldn't it be safe to assume that every pizza restaurant operator thinks his or her sauce is the best? Here are some suggestions for Sal:
-Sal needs some serious help. The sauce is probably not his USP. Sal needs to dig deeper and understand his competitive edge much better. -Sal needs some more help. Having only one operating pizza shop may mean that Sal is not quite ready to duplicate his business yet. Open another one, Sal. -Sal needs to document everything he does from open to close. If he can't do it, he needs to hire someone who can, which will lead to a great operations manual. If procedures are not documented, how can you expect a franchisee to duplicate the success? -Sal needs to take a step or two back. If he is only in it to make his millions, he may be setting himself up for disappointment. Very few franchisors make it to the big time. There is certainly nothing wrong with having big financial goals, but Sal needs to have some other tag-along goals. -Sal needs to start networking with local lenders -- now -- so he can start getting to know them. That way when it comes time to formally ask for money, there already will be relationships in place. Relationships are crucial in these financial times.
Sal (or you) may or may not have a business that is franchise material. If you decide (with the proper advice after considering all the factors) that you are going to franchise your business, be prepared to invest more than you think you will. And be ready to work harder than you ever have in your life. The rewards could be worth it.