Turning your business into a franchise


Turning your business into a franchise in Australia is particularly advantageous due to the nature of the national sector. With the four major players in the franchise sector accounting for less than 40 per cent of the market, the sector is therefore not overly concentrated, allowing for greater opportunities for small business owners to branch out (mind the pun) into franchising.

What is the state of the sector in 2018?

According to a study of the franchising sector in 2018, published by IBISworld, franchising as a whole is worth approximately $177 billion to the country, employing over 521,000 Australians.

Despite a dip, the sector is reported to have returned to growth, with 1.7 per cent growth during 2013 to 2018, which is thanks to rising disposable incomes.

The report finds that there are limited barriers when turning your business into a franchise, but that there are core foundations to successfully doing this and avoiding the same fate as some famous brands within Australia that suffered from mismanagement to see themselves either bought out, dissolved or reduced to a fraction of their former size.

But are you ready to turn your business into a franchise?

If you are still just playing with the idea of becoming a franchisor, ask yourself the following:

How successful is your business?

This covers a range of metrics, some of them less concrete. Your finances must of course show continued, steady and even impressive growth over the life of your business, yet there are other indicators of a successful business. For instance, does your business rely on a particular demographic in the local area for its success (that could potentially disappear with changes to the local area), or does the business enjoy interest from a range of consumers? Does the business stand apart from its competitors, potentially offering something they cannot offer?

This sort of analysis will lead you to the question: can this success be replicated?

Is there are mould for your business?

When analysing the success of your business, account for whether or not the processes that make the business run on a daily basis are streamlined and fine-tuned so that anyone with a firm understanding of business could then apply them to their own business. You may have created an incredibly successful restaurant due to the quality of the work coming from your staff, including service and food, but your management practices (i.e. stock management) may still lack enough definition to be easily applied to a new business.

Franchisees rely on being able to essentially turn the key into their business and have it running smoothly from the very start. The success of the franchise chain as a whole rests on the ability of its individual businesses to achieve strong growth from the beginning, and to not have numbers hampered by messy management processes or a lack of clear direction and support from you and your management team.

Bakery goods in a store

Are you ready for the change?

You will no longer be running  a single, or even a multitude of businesses yourself. As the original owner, your role shifts to that of the franchisor, requiring a host of different skills.

Consider researching further into the sorts of management practices specific to running a franchise chain, looking at courses that teach these business principles, while also engaging the services of professional consultants who specialise in this particular branch of business.

Running a franchise chain requires a much greater amount of communications and logistics, which will almost certainly require a team of professionals. For this reason, as well as the hidden costs of establishing new businesses, create realistic expectations of the associated costs you will need to cover.

How will you grow the franchise further?

As the franchisor, you are no longer just advertising a single business to your customers. You now need to advertise the brand, advertise the franchise to potential franchisees, while lastly advertising the individual businesses within their local areas as well as on a larger scale.

Marketing within the franchising sector is therefore a three-pronged fork that requires a great deal of attention and resources, but along with a strong initial brand, effective business processes and clear ideas for future growth, it is key to creating a long-lasting brand that can be replicated in various markets.

Still not sure about turning your business into a franchise? Read more here: What is franchising and is it right for you

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