Pretty much every business, whatever the sector, has a vision that it wants to grow in size over time. Done in the right way, growth can lead to increased profitability, which in turn can make a business a more attractive prospect for a buyer. But funding growth can be challenging because it frequently requires major capital investment.
One route to growth that requires less financial outlay is to franchise your business. This is the option that we took with Pyjama Drama. We offer drama and creative play classes for babies, toddlers and children up to the age of seven. The founder and my fellow director, Sarah Owen, is an experienced drama teacher. She initially created Pyjama Drama classes as something to run in her own local area. Franchising the business was the most logical route to growth because trying to set up and run classes in multiple areas around the UK – without local knowledge and without being physically in the area – would have thrown up all sorts of potential problems.
If you are considering franchising your business, you need to look carefully at your business model. Is it a financial success? You will need to demonstrate to potential franchisees that they can build a financially rewarding business out of it. You may decide to run a franchise pilot first so that you can demonstrate to them that it is a viable business.
You also need to be sure that there is a compelling reason why someone would buy your franchise rather than simply setting up in business themselves, offering the same service under their own name. More established franchises offer franchisees the benefit of a well-known brand, which can give them a head start when launching.
Or it might be the case that the franchisee is essentially “short-cutting” the time and creative investment required to set up from scratch. For example, in our case, clearly anyone could set up drama classes for children – the concept in itself is not unique – but we have developed and refined the sessions, we have hundreds of class plans, original music and we know for certain that our classes work and are popular.
The other consideration is whether your business needs highly specialised skills. The more niche the skillset, the trickier it may be to franchise the business.
Once you’ve decided to take the step into franchising I’d offer the following tips:
Seek sound advice Be as careful to obtain good advice, both legal and any help you may look for from a specialist franchise consultant. Unfortunately, there are a lot of franchise consultants who, in my opinion, do a poor job, so ask around and where possible, go with recommendations. Getting your franchise set up correctly from the outset is vital. You will need to decide about your pricing, have a franchise agreement drawn up, put together a comprehensive operations manual for your franchisees and you should be sure you have intellectual property protection for all your branding.
Choose the right franchisees It sounds obvious, but it is vital that you only take on franchisees who are right for your business. They have to be self-motivated individuals who genuinely want to run their own business. Often new franchisors – because of an understandable desire to grow their network – take on the wrong franchisees. This will only lead to problems down the line. Think carefully about what application process is most appropriate for your particular business.
You are entering into an continuous partnership so both parties need to be confident it’s the right fit.
Make sure your training and support is excellent Selling a franchise is only the first part of the story. You need to give your franchisees the best possible chance to build a successful business, and this means making sure your training is comprehensive and your continuing support is first-rate. When they are new, your franchisees will need a substantial amount of support. Although this will lessen as they become more established, you have a responsibility to support all of them as they continue to grow.
Franchising your business is certainly not a quick fix route to growth, and it brings with it specific challenges but, approached in the right way, it can provide a solid foundation for expansion.
Katie Moffat is director of children’s drama business, Pyjama Drama
By: Katie Moffat http://www.guardian.co.uk