Franchising has become a $144 billion sector in Australia, ranging from Subway, Baker’s Delight, Coffee Club and Gloria Jeans to Jim’s Mowing and a host of other well known brands. With the vast majority of franchise systems here actually originating in Australia, there is plenty of inspiration and opportunity for small business owners to look at franchising as a way to expand. Use our quick guide to check if your business is franchise-ready.
Franchising has become a $1441 billion sector in Australia, ranging from Subway, Baker’s Delight, Coffee Club and Gloria Jeans to Jim’s Mowing and a host of other well known brands. With the vast majority of franchise systems here actually originating in Australia, there is plenty of inspiration and opportunity for small business owners to look at franchising to expand both at home and away.
Use our quick guide to check if your business is franchise-ready:
Will your business model appeal to franchisees?
Potential franchisees aren’t going to be interested if you can’t demonstrate that your business is successful, and your brand is credible and marketable. You should be able to show a proven track record of success and importantly – profitability – over a significant period of time, and be able to back those statements up with hard data.
In addition to being financially successful, you need a reason for potential franchisees to pay you to use your brand instead of setting up their own business in competition. This means your brand needs to be unique, have high credibility or be widely recognised, or ideally a combination of all three.
If you can prove that your business’ success cannot be easily replicated by a copycat, and will generate a positive return on investment, then you may be ready to franchise. Now take a good look at market conditions. Is the demand for your product or service growing or slowing down? Establishing a franchise in a growing industry is far easier than in a shrinking market dominated by a few established players.
Can your franchisees be as successful as you?
If you can tick off successful, credible and marketable, the next step is to consider whether your success can be easily replicated by franchisees. You may only have a few weeks or months to teach the franchisee operator everything they need to know to replicate your success. If your business is mainly successful because of non-transferrable assets like your special location or your unique personal skill set, it may be impossible.
However, if your procedures and operating systems are clearly documented, and you are available to provide ongoing support, chances are an intelligent, capable franchisee can meet expectations and add value to, rather than depreciate, your brand.
Get some help?
If you believe your business meets all the above criteria, then it is time to consider what help you will need in establishing a successful franchise. While you may be an expert in your industry, you are about to start a business in an entirely new one—the business of marketing, selling and supporting franchises.
Firstly, you will need a lawyer to assist with drafting franchise agreements, applying for trademarks, registering your franchise, and general advice regarding your legal obligations as a franchisor.
You may also require the advice of franchise consultants, who are experienced with helping start-ups access all the information they need to succeed. It is best to enlist them at the very start of the process, as they can help analyse your business’ viability as a franchise, help you understand the franchising process and establish a strategic plan to meet your goals.
Recruiters or human resources consultants can also help with putting your franchise team in place. Public relations and marketing consultants are useful to give your brand exposure to potential franchisees, and to expand brand awareness of your franchise among potential customers.
While franchising is generally considered a low-cost method of expansion, there can be some hefty initial start-up costs. Talk to Prospa about business finance to fund your dream franchise operation – and exploit the benefits of franchising to help your small business go global. And if you already own a franchise, read our article about making your franchise a success.