What holds people back from franchising – Part Two

Most business owners think about small business franchising as a way to grow but I find most just don’t take the step to make the necessary changes. Over the years I have found there are a number of reasons.

To do this topic justice, I have written two blogs, each covering four of the eight reasons business owners have given me many times over the years.

This is Part Two covering topics 5 to 8. Keep on reading to learn about franchising a business.

Click here to see Part One covering topics 1 to 4

5. Funding growth

Growing a business is expensive and most business owners cannot see how they can fund the process from their own capital.

The beauty of franchising is that much of the growth is in fact funded by your franchisees. Naturally you will have to make an initial investment in making your business suitable to be franchised but once this is done, your franchisees will pay to establish their own outlets and, through ongoing fees, the costs of your expansion within the franchisor business.

6. Many business owners prefer to licence

This decision is usually taken because business owners are unaware of the pros and cons around licensing vs franchising.

There is no doubt licensing is simpler and cheaper to implement.

However, most people don’t realise they actually lose control over the way their service is provided through a licence. And if they do try to exert control through operations or branding and marketing requirements, they are actually franchising and that may be illegal.

Franchising has other great advantages too.

  • You can make sure your product or service is managed in accordance with brand rules
  • A franchised business is worth so much more than one which is licenced
  • Accordingly, it is a great way to put a profitable exit strategy in place

7. Many business owners think they have to plan to be a huge national to franchise

Many people think they will have to create a huge business and plan to go national to be suited to franchising. They don’t think they can achieve a franchise group from a small business, or that their business has the potential to grow in this way.

Franchises do not have to be huge. I have been involved with many regional franchises with less than 10 or 20 outlets. The business owners do not wish to grow beyond that size but they need the help of franchisee partners to succeed in their part of the world.

8. Unspoken fears

We all have unspoken fears, often unrecognized even by ourselves.

Top of the list is fear of failure. This is the one thing that stops most of us from actually getting things done and making change.

They see franchising a risky way of expanding, but the truth is that conventional stand-alone businesses suffer a far higher failure rate than franchises. And they require much more capital to expand.

Even if we are aware of the niggles which try to stop us from moving forwards, and commit to making the change, we often have business or life partners who are not so brave. It is difficult to move on with strong opposition.

The question to ask is – will you, at some time in the future, regret not giving it a try.

Check out Part One of this blog if you have not seen it.

And to learn more about franchising, visit FranchiseSimply.com.au and get a copy of my latest free book, How to franchise my business simply and perhaps organise to have a chat with me or one of my expert team.

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