Dive into the world of franchising on this Q&A with Lime Licensing’s CEO, Andy Cheetham, as he shares his experience, insights, and recommendation for companies seeking to franchise.
How can a enterprise decide if its mannequin is appropriate for franchising?
Franchising is all about replication. In case your present enterprise can create a clone of itself in one other location then it’s probably that your clone may very well be a franchise, supplied it may be worthwhile in fact!
I wish to see a enterprise that has gone by means of its studying curve already, and while no enterprise is ever the completed article, a bonafide franchise needs to be a developed format that has already received many of the wrinkles ironed out of it.
What are the authorized concerns companies want to pay attention to when venturing into franchising?
At Lime Licensing Group we think about Mental Property first, and get that in the precise fingers on the outset. Then there’s confidentiality agreements, deposit agreements for franchisees who want to safe a franchise choice, franchise agreements to put out the phrases of engagement, and typically different supporting legals from aspect letters, by means of to growth or grasp agreements.
What monetary elements ought to companies consider earlier than deciding to franchise?
Companies which can be able to scale have three choices.The primary is rising organically, the second is rising by means of acquisition, and third is scaling by means of franchising or licensing. A savvy potential franchisor could have thought-about the related capital requirement of every earlier than selecting franchising. Assuming that they then progress as franchisors, what issues above all else is that the franchise proprietor’s enterprise will be worthwhile with territorial restrictions in place and the presence of a royalty.
In easy phrases, a brand new franchisor ought to ask themselves if they may replicate what they’re doing in an outlined area, and with a reduction off their web VAT turnover of not less than 10%. If the reply to each of those is sure, then franchising is a chance. A brand new franchisor can get a 100% return on funding with the sale of the primary franchise, so the enterprise case is extraordinarily viable.
How can a franchisor present ongoing help to take care of consistency throughout franchise areas?
Franchisors ought to examine what they count on. I’m used to seeing franchisors making an attempt to handle all the things in-house, however typically exterior suppliers can just do pretty much as good a job. Both means, the principles of engagement are set out in every franchisee’s operational guide after which it’s the job of the franchisor to make sure that requirements of supply from franchisee to buyer are according to the rules.
How can companies tailor their advertising and marketing methods to advertise their franchise mannequin?
By conserving the traits and core model message, a brand new franchisor can give attention to how greatest to convey the enterprise alternative of becoming a member of them. Most proprietor operator franchise consumers are in a profession change, so current contacts won’t be the most effective place to roll out franchise advertising and marketing. At Lime Licensing Group we’ve round 50 completely different media channels that may work. It’s all the time a problem to find out which media or technique will generate franchise enquiries, however that’s one thing we as consultants may help new franchisors with.
How can a enterprise make sure that potential franchisees align with the model and values?
We by no means promote franchises over zoom or the phone alone. As a substitute we goal to get them into the atmosphere they might be working in and interacting with purchasers at some stage. When you’re a care based mostly enterprise, are you able to set one thing as much as observe them in a care atmosphere? HQ visits can work effectively too and we’ve a variety of purchasers who do psychometric exams to complement their judgement.
How ought to companies conduct market evaluation to determine potential franchise areas?
Any good franchisor is aware of assess a brand new area or standards for a brand new outlet, however it’s vital that the franchisee ensures a passable industrial atmosphere exists within the proposed space. So they should discover the competitors they may encounter. This ends in new franchisees being proactive and exhibiting the franchisor they perceive that in lots of circumstances, resulting from their proximity to their precise franchise, that they’re greatest positioned to discover a location or assess native demand for a services or products.
How can know-how be leveraged to streamline franchise operations?
Unified know-how – each {hardware} and software program is all the time useful. It makes help , implementation, and upgrades simpler. Having everybody utilizing the identical tech ends in consistency whether or not it’s the CRM, bookkeeping software program like Xero, or POS Methods for retail.
Franchising is a strategic leap that requires meticulous planning. Assess your small business readiness, set up a strong system, navigate legalities, and prioritise clear communication with franchisees. Success hinges on adaptability and a dedication to excellence. To seek out out extra about how Xero may help you in your franchising journey, go to our devoted franchising homepage right here.
