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FranchiseTalk: Thinking of Franchising Your Business? Answer These 6 Questions to Help You Decide

Franchising is simple. You just need to clear about what your goals are
By Manuel Siggaoat

1. GROWTH 

Will you add more branches or are you satisfied with the number of units you already have? 

If you are content with the current branches you have or will add only one or two more branches, then no need to consider franchising. You can stop reading this article here. But, if you want to add 10, 20 branches or even more, then CONTINUE on to the next question.

2. FUNDING

If you do want to keep growing, will you keep putting your own money into additional branches or will you need money from other sources?

If you have enough money to keep funding your new stores, then no need to think of franchising. Just keep funding new branches with your internal capital. You can stop reading.

But, if you are like most small to medium-scale business owners, and you don’t have enough capital to put into all the additional stores you want to build, then CONTINUE on.

3. MANPOWER

If you do want to keep growing, will you keep managing new company owned units directly and adding branch personnel to your payroll, or would you rather delegate this task to highly incentivized owner-managers?  

If you have no problems managing new branches directly and adding staff to your payroll, then no need to think of franchising. You can stop reading.

But, if you are like most business owners, adding more branches becomes a challenge, if not a nightmare to manage directly. If you would rather bring in owner-managers who have more at stake in the branches and will take over daily operations from you, then CONTINUE on.

4. EXPANSION METHOD

If you want to continue to grow but don’t have enough capital, how will you raise capital?  

Here are some alternatives plus some quick Pros and Cons:
– Loans 
PRO: You retain full ownership of the business.
CON: Can be expensive and usually requires collateral. You still have to manage additional branches directly.

Outside Investor / Partner 
PRO: No interest expense.
CON: Dilutes your ownership, less autonomy. Very difficult to terminate relationship when it is not working out.

Franchising 
PRO: While using other People’s Capital and Time, you retain ownership of the company.
CON: You need to prepare well but may not have the expertise to do so.

If you decide on other methods like applying for a loan or getting investors, you can stop  reading. But, if you believe franchising is the best way to expand your business, CONTINUE on.

5. FRANCHISE PREPARATION

If you’ve chosen franchising as the way to grow your business, should you develop the program, manuals, contracts, etc. on your own (Do-it-yourself DIY franchising) or should you get help from an expert?

Franchising is simple—growing your business through other people’s money, time, and personnel. But the devil is in the details. There are so many considerations to franchise decisions that it is practically impossible for someone to DIY franchise development correctly.

If however, you still prefer to develop your franchise program on your own, you can stop reading.

BUT, if you want to have your franchise program done correctly and not go through a costly trial and error process, you may CONTINUE.

6. FRANCHISE DEVELOPER

If you agree that getting help from an experienced franchise developer is best, the next question is: which developer do you work with?

In selecting a franchise developer, pick someone who will be able to provide integrated products. A franchise program needs several components: strategy, finance, legal, operations, marketing, sales. These components have to work together and link seamlessly, instead of being unrelated parts of a whole. Pick a developer with strengths in each of these areas and has a track record of success and specialist consultants who will guide you in every component.

*****

Noel Siggaoat is the Managing Director of Francorp Philippines (francorp.com.ph), the largest franchise consulting group in the Philippines

As seen on Entrepreneur Philippines