Use the franchise model to scale your business

Use the franchise model to scale your business

A franchise is a right or license one gets to operate and market a company’s goods or services in another territory. Franchising was pioneered by Mr. Isaac Singer in the 1800s, when he found people interested in selling the 900 stitch per minute sewing machines he had just patented and charged them a license fee to sell his machines. To date, the singer brand is in stores all over the world.

Many more have found success in franchises over the years, from McDonald’s to the Woolworths brand, however, if not done carefully a franchise can be too hard a burden on both the franchisor and franchisee. Just recently, South Africa based Mr. Price Group had to take back its Mr. Price franchise from Deacons East Africa who had held it for 10 years following a decline in earnings.

Steps to successfully franchising your business

  • Create a system

Any person that buys a franchise must follow the systems and procedures set up by the mother company and as such, the starting point for any hopeful franchisor is building a smooth a system. Create instruction guides to help the franchisee know the correct message and image to portray in marketing campaigns, provide guidance on staff training (ethics, behavior, customer care), day-to-day operations and develop policies on which franchisees’ decisions and ideas will be based on.

  • Build a brand

McDonald’s, KFC, Domino’s Pizza are all successful brands and franchises; what is common about them is that their names, logos, colors are attached to a specific narrative-a culture, experience, quality etc. The only reason people buy into franchises is that customers and loyalty already exist, and the moment they open shop they are almost guaranteed of a customer base.
Thus, for any business looking to franchise building a brand is the first mountain to climb. Here is one of our articles on how to build and protect a brand for your business.

  • Consider location

Franchising is often a way for a business to expand into new geographical areas, however, if branches are too close they can negatively affect each other’s sales. Remember, to remain in business franchisees can only enjoy profits after deducting their expenses, in addition to your licensing fee. Their profitability is as important to you as them.

Furthermore, consider the level of competition in the areas you approve franchisees to operate in, are there strong competitors operating in the same market? Does your franchisee have the capacity to compete and still maintain your brand’s strength?

Franchising is a method of scaling businesses that has stood the test of time, and which if done correctly, could quickly grow your business at an unprecedented pace and also make it more attractive to investors, however, franchise wisely.

Gabriel is an entrepreneurship enthusiast, with a fondness for questioning the workings of everyday things. He is an entrepreneur, a lover of stories and a member of Rotaract. He is also a student, the fact that anyone can change the world is the only thing keeping him awake in class.

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