Matt and Liz Raad

Franchising – Is It The Best Way to Sell Your Business?

We meet many business owners who tell us they are going to franchise their business as part of their long term exit strategy. We can understand why; it sounds so exciting -you get to rapidly grow your business and you get the ultimate big payout because you get to sell your business over and over again and make lots of money.

But is Franchising really the best way to sell your business?

It is all too easy to be convinced of the merits of franchising — the dream of big money from rolling your business out across the country (or even overseas) is very compelling, BUT, it is here is where we see business owners make costly mistakes and decisions. Believe it or not it costs quite a lot of money to even start thinking about franchising! It is not as easy as you think or have been lead to believe by some “Franchise” consultant!

Franchising is a specialised process and requires the use of specialised franchise consultants and lawyers. We have seen many business owners start down the franchise track only to realise after spending much time, money and energy, that franchising is not for them or their business is not really suitable for franchising.

We want you to understand that;

Franchising is not a “walk out” strategy. It’s a way to work at a higher level on your business.

This is an important distinction ie by franchising you are not exiting your business, you will still be very much involved and attached to your business and constantly working on business improvement.

We would suggest you need to consider very carefully whether franchising is the right thing for you and your business.

Make sure you are honest with yourself, your business and your capabilities here! No delusions! Seriously -we know many business owners will still want to franchise their business even though it is totally inappropriate!

Many business people go down the expensive and time consuming route of franchising their business only to find it doesnt go to plan because they failed to understand and examine some basic fundamentals of their business.

The most fundamental rule we can give you before you even consider whether to franchise your business or not is:

“Your business must be an existing and PROFITABLE business”

This is a very obvious no-brainer (say yes!), yet we see so many business owners totally ignore this critical rule! If your business is not already profitable you will struggle with franchising. You need to show that your business model works and that it’s profitable otherwise how are your franchisees ever going to be profitable and how will you ever sell franchises unless you can show a new buyer that they will make money?

DONT PROCEED WITH FRANCHISING UNLESS the business is already profitable! Hopefully you get this one loud and clear!

In our E-learning mentoring program we cover a whole series of questions and detailed checklist of the sort of things you need to consider before you start spending any money on the franchise process.