DYI Franchising A Business: Think Again
QUESTION: I’ve studied franchising and have spoken with consultants who think my business can be turned into a franchise. I realize that you help people franchise businesses, but are there cases where an entrepreneur could just do this on their own? I’ve purchased templates for the disclosure documents and franchise agreement.
Franchising Your Business? Do Yourself A Favor
The only thing more dangerous than what you are contemplating– using ready-made, one-size-fits-all franchise contracts — would be to get a competitor’s offering circular and just put your name, address, and business information in place of theirs. That strategy is simply not a feasible or sensible way to move forward with your franchise business plans. In fact, the odds are great that you are setting yourself up for failure.
If you decide to franchise a business without assistance, it’s our opinion that you are taking an unnecessary risk with your money, time, business and ultimately, your reputation. Know first and foremost that franchise failure rates are high; much higher than the general public realizes. Here some previously well known brands that ended up as very troubled franchise systems.
A Real Franchise Feasibility Study & Experienced Eyes Will Pay Off
Give yourself a fighting chance. Thoroughly study feasibility and understand the elements of FDD’s (Franchise Disclosure Documents) and Franchise Agreements. Ensure that your paperwork is original and stamped with your business, not the personality of another concept. If you have not done so already, take some time and read our articles on franchisor success or failure. Going forward with franchise contracts that don’t take into account the nuances of your business strategy is a bad idea. And of course, doing so without expert guidance from a knowledgeable franchise consultant can be a very expensive and upsetting experience over the long haul.
While we advise against DYI franchising, it’s certainly not out of the realm of possibilities for you to succeed on your own. All of the franchise greats from the 1960’s were essentially on their own and feeling their way at every step. However, that was a long, long time ago and the world of franchising was nothing as it exists today. Most of them fumbled around until they found answers. They were pioneers and had no competition. It’s simply a far more sophisticated endeavor today from competition to economics to the law.
Your Concerns Must Go Beyond Yourself, Your Business & Your Beliefs
Based on our experience, prospective franchisors are too often taken in by the dizzying prospects of super growth, great financial gain and a franchise brand of renown. Our position and responsibility, as it has been from the very beginning, is to slow down the process so that reality can replace unbridled excitement. Franchise feasibility, as mentioned above, is a critical pause to check reality. But within that reality check is a long look at the future and that means potential franchisees.
Many wonderful business concepts are established and brought to success by bright, skillful entrepreneurs but they may not be franchise worthy. You must be mindful of the lives that might be entrusted to your care. Unless you know the world of franchising both from a franchisor and a franchisee perspective, you do not know franchising. DYI franchising is actually quite easy. Just get the forms and fill them out. But franchising a business without competent guidance and understanding the nuances and pitfalls of the industry is a very foolish bet.