Okay so, you’d like to franchise your business. Well, that may sound like a great idea, but there is a little more to it than the basics covered in Michael Gerber’s “E-Myth” book. You see, perfecting your business model and turning it into a process for duplication is only the first step, and it doesn’t guarantee your franchising operations will be successful, as there is a lot more to it than that really. Don’t get me wrong, franchising can be a great way to go, it worked for me.
Before retirement I had franchised my company with operations serving over 20-states and 450 cities. Still, the concept of franchising and getting rich from your business idea and business model is somewhat of a misnomer, and it doesn’t happen overnight. There are several stages to franchising your business, and maybe we should talk about this? I’ve broken it all down here into three-stages (yes, a little over simplified, but bare with me, there is a point here):
1. Perfecting the Business Model
2. Securing Funding and Registrations
3. Re-Formatting Your Brain to a Franchisor’s Mindset
Perfecting a franchise business model takes time, it’s not something that happens overnight, and I can tell you in my own franchising company it took me a good 13 to 15 years to perfect our business model. Only then were we able to franchise it, knowing that we could tweak it regionally to make it work anywhere. And just because you have a perfect business model doesn’t mean that you can franchise it unless you have the capital behind you to make it work.
Typically a franchisor needs a minimum of $1 million, provided he doesn’t make too many mistakes in the beginning to see the company through until it gets to a point that the royalties coming in can maintain a steady cash flow. Franchising companies always need more money, and the faster they expand, it seems the more money they need. They need to hire more talent, and support their franchisees which are growing exponentially.
Lastly, there is a big difference in how a franchisor operates his business, than how the franchise business model entrepreneur operates his. A small business entrepreneur that let’s say has a few restaurants, and has totally come up with a perfect business model for that particular food venue, knows his business inside and out, but franchising is a totally different animal. Franchising for the franchisor is much more like a distribution and informational support company.
That doesn’t mean you don’t have to know your business better than anyone else in the world, you definitely do, and you will definitely need lots of capital to get going. But most importantly you are going to have to grow up and re-format your brain to a franchisor’s mindset, without forgetting anything that you’ve learned in the past. You have to bring it all together and it’s not easy. Indeed I hope you will please consider all this and seriously think on it.