27 Jun Should you franchise your business?
If you have started or purchased a successful small business, you may have friends and family encouraging you to think about franchising it. But when is it a good idea to franchise? Let’s have a look.
First off, it’s good to know that “franchising” is what happens when you give an independent contractor the right to use your logo and product. In return, you get a periodic royalty fee and the right to set the standards that the contractor must meet.
Your business might be ripe for franchising if your business has established a solid reputation in the community and you think that the demand for what you offer will be strong in other areas. Franchising can be attractive to a business owner because the franchisee puts up all the capital and takes all the risk. But franchising can have its dark side, as well.
If a contractor misrepresents your business name through poor product quality or customer service, the overall brand can suffer -including your original business. So before giving anyone the right to use your logo and brand, be sure to screen them well and make sure that you have a specific program that they can follow when running the business.
Franchising has been a great tool for corporations, and it may even work well for you. You can get paid money in royalty fees each month without having to do any work.