Scaling your business through Franchising

A general lesson I instill to my network of entrepreneurs through eFreedom2013.com is that every successful business has to go through 4 Stages:

• 1. Creating a profitable System in the 3 key areas: Marketing, operations and finance
• 2. Automating the business processes by developing the key people and getting the best tools and technology so you are not working in the business but on the business
• 3. Scaling the business to its critical mass both in market share and price points
• 4. Selling to enjoy the fruit of your labor (you can retain percentage ownership or even a management contract to continue the cash flow streams you built)

In this blog I want to talk about number 3 Stage: Scaling your Business

You can scale in many ways. To name a few:

• 1.Operate several locations
• 2.Create a Multi-level marketing and networking system
• 3.Create a licensing agreement for affiliates to sell your products with certain guidelines
• 4.Create a franchise concept to get franchise fees
• 5.Sell the rights to another Co. that can help you expand while you collect a dividend like a royalty on sales
• 6.Join, merge with or buy a competitor

One of the most viable and profitable ways is to franchise your business. But scaling your business model as a Franchise is something that requires alot of analysis. Start by answering the following questions:

What kind of people can operate my business?

Is my current team at the level where we can expand?

Can the product or concept be duplicated?

Is there a large enough market for my concept?

Do I have a better positioning than other competitors?

Are all my processes and systems written and implemented in a way that will make it easier to duplicate by others?

Is my business automated to a point where I can run it from a distance while keeping good controls over the 3 key areas: marketing results, operational efficiencies and Financial statistics?

Is the technology being used currently a help or a hindrance for the growth potential?

Does my concept offer a reasonable return on investment to prospective franchisees?

If the answer to questions like these is affirmative then let’s dig deeper:

What is Franchising and what is the concept all about?

Generally speaking, it means expanding by opening similar locations to existing successful ones to duplicate a business model through other independent entrepreneurs by selling them franchise rights to use your business name, systems and automated structures in marketing, operations and finance.

You become a Franchisor and you sell to a franchisee for an initial franchise fee a specific location and certain rights to operate under the business trademark. Usually the Franchisor demands that the applicants have a certain net worth, experience and solvency ratio to accept them into the system.

The concept of franchising is ideal for all involved because Franchisors provide training and on going guidance. This is invaluable for the early stages of any business, especially if the entrepreneur had a different background like corporate management or worked in a different line of business.

In many systems a franchisee will pay an ongoing periodic royalty fee for continued support and training in advertising, marketing, sales, operational guidance, financial and human resources consulting, and other services.

The beauty of expanding through the franchising business model is that it provides the lowest cost and risk that could be associated with growth from the franchisor point of view. You see the franchisee furnishes all of the capital required to start the business and pays for the right to assume all the risk associated with the success or failure of each endeavor

As a franchisor, you only need to invest in the appropriate legal documentation, strategic planning, operations manuals, and marketing materials, and you are "in the business" of franchising.

From the Franchisee’s standpoint, it is still a lot less risky to go into a proven business model, with all the support and guidance needed than to venture on their own.

Franchisees are responsible for the entire investment in opening locations and complying with the rules and regulations set by the Franchisor. After investing a large sum of their own capital the franchisees become highly motivated to perform well, this allows franchisors to grow much faster than most other expansion models.

The key to success in any franchise system is, the system that was created by the franchisor and the way they automated it before scaling it. It must be so flawless that it ensures the success of each franchisee, and each consumer using the products sold in each location each time.

That is the formula of success, because it is all about delivering value to all involved. And if you stay focused on the success of your franchisees, through the consumers they serve under your brand, than the money will follow and your expansion goals will materialize to the highest level imaginable.

If on the other hand, you just focus on the money you can make through franchising and the value proposition becomes secondary, I assure you, your expansion goals will not go far and the scaling of your business stage will be a complete failure.

Nothing sells more franchises than successful franchisees exuberant about their returns from a particular franchise because of the franchisor’s workable system and automated support.

I hope I am not over simplifying the Franchising business model. It certainly comes in with its own set of challenges since you are expanding your brand and have to rely on others to act professionally, legally and profitably. But despite its minor complications, if planned and executed correctly, it can reap huge rewards for entrepreneurs who want to grow and scale their business and need to leverage their time, money and effort.

Once you reach that stage, you can reach out to eFreedom.com as we would love to assist you to get set up as a franchisor and can provide you with a free consultation to reach your ultimate personal and business potential.

To your growth and contribution.

Wishing you much success

Cherif Medawar

Founder eFreedom2013.com