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3 scenarios where franchising may be your best small business growth strategy

3 scenarios where franchising may be your best small business growth strategy

When considering growth strategies, small business owners may overlook franchising. Here are three solid reasons it may be the best option

While fast food and fast casual restaurant chains tend to be the first things we think of when considering the idea of franchising, the franchise model has been successfully applied to businesses of all sorts:

  • Auto mechanics (like Midas and Firestone)
  • Barbershops (like Fantastic Sam’s)
  • Cleaning services (like ServiceMaster Clean)
  • Financial services (like Liberty Tax Service)
  • Construction (like Garage Experts)
  • … and many more.

In fact, there’s really no reason why any sort of business, in any industry or location on the map, should completely rule out franchising as a potential growth strategy, as long as one or more of the following situations exists:

Your current business model combines “something old with something new”

One of the key success factors in a business that’s ripe for franchising is the existing brand’s business model. The franchises with the most promising potential take a product or service that customers and others in the industry are very comfortable with (something old) and combine it creatively with a unique twist that stands out (something new).

For example, Wholesome Tummies was born out of two Florida mothers’ frustration with the quality of public school lunches. Their business model combined something old — every parent’s desire for their kids to be healthy, and the idea of brown-bagging a healthy school lunch — with something new — customized, healthy, and delicious lunches delivered directly to kids at school every day — to create what’s turned into a popular franchise opportunity for work-at-home moms living in public school districts that still aren’t delivering on the kids’ need for wholesome, nutritious lunch options.

So, ask yourself: Does my business model take a proven, saleable concept with wide appeal, and approach it in a new and creative way that sparks interest?

If so, it may be a great candidate for growth through franchising.

Your brand’s success can be easily duplicated

In some cases, a company or brand explodes in popularity and experiences incredible growth based around “a special something” that’s tough to put your finger on. Often, it revolves around a particularly charismatic founder or an iconic brand identity, but whatever it is, it’s not something any other company will be able to effectively duplicate without looking like an opportunistic clone trying to cash in on the original brand’s popularity.

If that’s how your current success can be explained, your business probably isn’t a good fit for franchising as a growth strategy.

On the other hand, if your business model is based around one or more effective systems that can easily be duplicated by other entrepreneurs with the proper support and training, it’s the very definition of a promising franchise opportunity.

These duplicatable systems should impact nearly every aspect of running the business, from how a product is made or a service is performed, to the hiring and onboarding process, and everything that goes into marketing and branding.

For example, if you look at any successfully franchised restaurant chain, you’ll note that no matter where you go, the menu looks essentially the same, the food tastes the same, the employees wear the same uniforms and use the same terminology, and a glance behind the scenes would confirm they’re all using the same equipment and getting their ingredients from the same suppliers.

That’s why loyal customers of McDonald’s, Chipotle, or Dunkin’ Donuts can feel comfortable visiting their favorite restaurant no matter where they are, who owns that particular location, or how new or old it is. They know what they’re going to get, and that provides comforting peace of mind.

You’re in a position to support franchisees with consultation, training, and even financing

Taking the previous scenario a step further, even if your existing business is based around highly duplicatable systems and you have the track record to prove these systems can be successful under varying circumstances, you’re still unlikely to find franchisees willing and able to invest in the concept unless you’re able to hand them a “turnkey system” they can count on.

In other words, to successfully expand your business via franchising, you need to make it as quick and simple as possible for franchisees to get your systems set up and running so that profitability is nearly immediate. If you can’t (or won’t) do that, you’re setting them — and, therefore, yourself — up for failure.

One of the main reason entrepreneurs look to buy a franchise as opposed to starting their own business from scratch is that they should be able to expect to hit the ground running by investing in an established brand with proven systems already in place. They should be able to rely on the parent company to do everything in its power to help each franchise location get set up for success quickly, since each location’s success enhances the success of the parent company.

If you’re not in a position to focus adequate time, energy, and resources on providing that level of support for franchisees, they’ll be able to easily find other franchise options that will — and your company’s growth will stagnate as a result.

When franchising isn’t the best option

If your small business is successful, but none of the above scenarios apply, franchising is probably the wrong growth strategy for you. That doesn’t mean your company isn’t primed for growth. It could be in a great position to explore acquiring one or more businesses , taking on new partners or investors, or opening up satellite locations on your own without involving franchisees.

Or, if you like the idea of growing your business via franchising but the above scenarios don’t currently fit, you can put effort toward making the necessary adjustments to your current business and pursue franchising later on.

Either way, it’s important to keep franchising among the potential growth strategies you consider throughout your company’s lifespan. If you have any more questions about the franchising process or may be interested in buying or selling a franchise, take advantage of BusinessesForSale.com’s extensive franchise resources and listing section.



Bruce Hakutizwi

About the author

USA and International BusinessesForSale.com Manager for BusinessesForSale.com, a global online marketplace for buying and selling small medium size businesses. The website has over 60,000 business listings and attracts over 1.5 million buyers to the site every month.

@BizForSaleUS

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