Selling or Buying a Franchises As a Panacea

Why bother to sell a franchise?

First question to ask yourself if you are thinking of franchising your business: Would you buy it yourself?

If someone has a successful business, it’s easy for him to think it can be franchised. But why should someone pay him for the company name and his expertise when they can probably duplicate the same entity at no additional franchising cost?

There are some questions you can ask yourself about the possibility and logic of franchising your business?

You cannot successfully franchise your operation if:

1) It is easily duplicated or entered into.

2) You do not have a highly recognized brand name.

3) You do not have special management expertise to offer.

4) It’s hard to service or manage operations, from your site.

You must realize, too, that the usual upfront fees and the royalty you take on sales, that cover whatever management training and materials you may offer, will probably represent about half a franchisee’s net earnings. That fact is bound to eventually infuriate them, assuming they become successful. There is no telling what their fury may be if they fail after investing in your advice.

So they may eventually cheat you or form groups with any other franchisees you may have, to sue you over contract terms.

Question: If you want to franchise your business, can you finance and constantly control the finances of your franchisees? That is most important, if you do decide to franchise. It is the most important binding link you can have to the prospective franchisee.