Scaling your brand: is franchising in your future?

By Matej Varhalik | 10 Jan 2022 View comments

Franchising is a popular model for growing a business but not all businesses are suited to the franchise model.

An overlooked aspect of turning a business into a franchise is the owner’s appetite, their vision and motivation, to expand this way. You know you have the appetite to become a franchisor if you see that your brand can be more than a few sites. You see it as a concept, a movement, a community – something bigger than a business. And you’ll know it’s real because you won’t be afraid to work hard to make it happen. 

Starting a franchise is about working on the business at a macro level, so consider what your role will look like once you franchise. If you like the hands-on nature of running a business and seeing clients, then working in the business is ideal. As a franchisor your role could be sitting in an office dealing with suppliers all day and that might not be right for you.

When I co-founded SpeedFit with a friend, it became clear that I had the appetite to franchise and he was satisfied running a few studios. As a result, I became a franchisor and my co-founder is now a multi-studio franchisee and we are both happy with our respective roles. 

Start with a model

When considering whether to expand via franchising, it helps to scale cautiously at first so that you get a taste of running multiple businesses and can work out any teething problems before you launch as a franchise. Having more than one company-owned site, or starting with just a handful of franchisees in a pilot program can help you understand the people you should be recruiting to be franchise owners and the support you should be offering as a franchisor.

Test the model first, ideally with several locations, to see if it’s easily scalable and if you can document procedures and create a ‘recipe’ for success. It’s easy to sell a brand, but it’s much harder to create a sustainable franchise business model with long-term financial returns for both franchisor and franchisee.

Once you decide to franchise, commit to it and expect to work hard for several years before you see tangible results. Being a franchisor is not quick money, it takes getting to a certain size before the benefits of scale kick in. You may wish to accelerate that process by seeking external funding and appointing an experienced consultant to help create a sustainable model, however always ensure the person you appoint has worked with brands you know are successful. 

The right franchisee

The other factor to consider is whether you can recruit the right franchisees to take your brand forward. I find the best franchisees have a mix of traits: they have vision and ambition to dream big, work hard, and achieve long-term goals; they are focused on delivering high quality experiences and results to clients; and they are willing to help others, from clients to team members, to other franchisees in the network.

The interesting thing we discovered over the past year was that often great franchisee candidates – for example, trainers who are ready to step up – don’t have the capital to buy a franchise and people with capital are not necessarily great franchisee candidates. In response, we devised a part-ownership model where the franchisee puts up some of the capital and the company puts up the rest, and we share the revenue. The franchisee is responsible for the studio and can work to become a full franchisee by buying out the remaining share of the franchise. Successful franchisees make successful franchises, so make an effort to reduce the barriers to entry for the people who are going to be the best ambassadors of your brand.

Franchising is not the path for every business but, done right, it is a rewarding way to grow your brand.