What Stage You Need to be at to Franchise your Business

April 28, 2022 Off By MMORex



Your business is growing, cash flow is good, and you know there’s opportunity for expansion. You may be thinking about franchising your business. You want to know if you’re ready and what stage does your business need to be at to franchise?

To be franchise ready you need to have the right numbers, founder mindset, and a scalable business. In this video we discuss each of these factors:

1. The Numbers
The most common questions that franchisee candidates and franchise brokers ask is “how much do you make and how much can I make?” In the franchise world, this is called “Financial Performance Representations” and in order to speak about cash flow, it must be properly disclosed in your FDD. So, if you’re profitable after accounting for lower sales and increased expenses that your franchisees will experience (including fees that will be paid to you as franchisor) your franchisees will be profitable and, potentially generate a good ROI on the investment they make in establishing a new franchised location.

2. Founder / Team Mindset
The same passion that you put into developing and growing your business is the same passion that you need to put into franchising. Can you envision yourself learning franchising, building a franchise organization, attending franchise development conferences, and building, over time, a franchise organization?

3. Scalability
Your business needs to be scalable. The systems, processes, and supply chain that you’ve built need to be capable of supporting franchisees and providing them with that extra edge that they’ll need to succeed. This all doesn’t need to be in place on day 1 but it needs to be there and, over time, needs to become a part of a system that you continuously improve for your franchisees.

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