Is Franchising Always A Good Option?
By and large, franchising a business is a surefire way to boost your growth and meet the potential of what that first, singular concept can achieve. As well as this, the risk of failure is often dramatically reduced, as your business is based on a proven idea, and you will be able to see just how successful other franchises have been before you get into the process.
But, having said this, franchising isn’t always the best option. If you are running a successful business and you are thinking of reaching out and finding a franchiser to give you support, then you need to think hard about the context of the market that you’re about to step into and how it might affect your business in the long run.
Franchising As A B2B Company
If you are running a B2B company, for example, then you have likely put a lot of work into marketing to existing customers and ensuring that customer loyalty is at the top of your priority list. Oftentimes, this is achieved through a strong loyalty programme, giving the customer incentives to remain loyal and stick with your company over the competitors – visit www.incentivesmart.com for more information on this.
But if you have taken the time to set up this loyalty programme, then how might franchising affect it? Similarly, is it possible to give those existing customers the same incentives and rewards if you are branching out into a franchise system? If not, then you will have to be aware that some customers may feel disenfranchised by the change in your company and switch to a competitor who offers something different, despite the effort you have put into keeping them.
Valuing Creativity
It’s also important to remember that, as part of a franchise, you are going to have to adhere to franchise laws in the UK, as well as rules and regulations. This means that, although you are still the owner of the franchise itself, your creativity and independence of a company might become more limited. Or, at least, it might not have the same room to fly as when your business was entirely self-serving.
This also has a lot to do with the costs that are attributed to creating a franchise. In the beginning, all the initial investments and finances can be very expensive, which means a good portion of your efforts will be going into marketing costs, recruitment costs, service fees, pay management fees, royalties – the list goes on and on. In this way, it is easy to see why innovation and creativity can be put on the back burner in order to focus more on the finances and how they are managed in those first few years.
Franchising As An Option
With this being said, the advantages of franchising do tend to outweigh the disadvantages – especially if you are still developing as a new, small business. So much of franchising potential comes from the fact that all of the core factors – customers, brand awareness, established target market – already exist, meaning it takes less time to generate big profits. But it’s always important to look at both sides and weigh up your own company and how it might work for you before you take that crucial step.
