5 questions to ask before you franchise

There are many Benefits to franchising your business. However, before go writing that FDD, wait! If you skipped the question of “Should I franchise”, you need to take a step back! These five questions will help you know if you should franchise your business.

    1. Is my business right for franchising?
      • An established, profitable business is the baseline requirement for franchising. However, having these three requirements in place do not guarantee that your business is right for franchising. If you have a successful business but tight margins, there might not be room for a royalty. If your business relies on your unique skillset combination, it may not be easy to replicate. Finally, if you are in a business that is extremely localized (NYC T-shirt store in Times Square) or seasonal, it may not make sense for franchising. By the way, a good franchise consultant can help walk you through a feasibility study to help make these determinations.
    2. Am I right for franchising?
      • Franchising requires a complete change in what you are doing now. Instead of running your business, you will be a franchisor. Do you have the patience to deal with individuals who may want to change your model? Do you have the tenacity to push through rough patches, unhappy franchisees, litigation, and all the other hurdles that are part and parcel to this business? Do you have the wherewithal to say NO to a prospect that is really into your brand, but you know would be a bad fit? Even if saying yes would allow you to make payroll?
    3. is now the right time for me?
      • If you decide to franchise, it’s going to take over your life for a while. That might sound extreme but talk to any emerging franchisor and they will tell you that they are constantly thinking about the franchised business. Additionally, its expensive. Depending on your business model complexity and growth plans, you can anticipate laying out between $100K-$500K before your franchise is self-sufficient.
    4. Is now the right time for my business?
      • Franchising WILL take your focus from your main business. The business you are franchising needs to be basically self-sufficient before you take the step into the franchise world.
    5. Are their better options open to me?
      • Many franchise consultants, franchise attorneys, or other franchise professionals will tell you that franchising is “where its at!”. I think that goes back to “when you have a hammer everything looks like a nail”! There are other ways of expansion. Franchising, if successful, is likely the fastest way to a national footprint, but you are also giving up a lot of your profits, so you should at least consider expanding through corporate owned locations, or even doing both.


If you are having trouble knowing the “right” answer to some of these questions, you should bring in outside advice! Franchising is a tight community, and most people involved love to share information. Talk to franchisors, franchisees, franchise business consultants, and anyone else involved in the business. Connect with your local IFA chapter. Get plugged in and see if it feels like a world you want to spend the next 20 years in!