The hospitality industry has been openly struggling in recent years. A global pandemic limited public interaction and starved venues of custom, while the after-effects of Brexit saw the price of imported ingredients and other goods rise significantly. Still, hospitality is an industry of opportunity, and independent names are making a big name for themselves thanks to innovative re-focusing and branding. Say you were one of these businesses, and you were looking to expand; would franchising be the way to go?
In essence, franchising your business is the granting of rights to a third party to trade in the name of your business. It is most commonly seen as a strategy in the restaurant and hospitality industry, where fast food chains offset the day-to-day running of local outlets to self-employed traders.
Why Start a Franchise?
Franchising can be an inexpensive and highly profitable way to increase reach and grow within an industry. Each and every franchise agreement looks different depending on the business model and individual needs of the owner and franchisee but can overall be a strong way to command your market share.
You could franchise the business format, giving a franchisee license to operate in your name according to your instructions; alternatively, you could defer the day-to-running of branches to franchisees, and operate as a form of ‘head office’ in developing the overall business full-time.
Is it the Right Move?
Franchising can be an incredibly useful growth strategy, but also comes with several concessions. For one, the outsourcing of branch management and staffing to a self-employed third party, even with a concrete business manual, runs the risk of an inferior product or service being sold in your name. Ultimately, only you are in a position to understand whether or not franchising would be a beneficial move to make – but if you do decide to franchise, the following steps illustrate your optimal line of approach.
How to Franchise Your Business
Document Your Success
For franchisees, there is a financial cost to buying into your trademark; you’ll need to show franchisees that your brand is a successful one, necessitating a robust set of documentation outlining your growth figures.
The Legal Aspect
Selling rights to a brand is a complicated affair, and there will be a number of legal quirks unique to your business that need ironing out. Consult a lawyer and protect both you and any future franchisees with the resulting documents.
Costs
Depending on the specifics of your agreement, there are costs attributed to assisting a franchisee in opening a branch. You may need to invest in cookware and other appliances for the initial branch fit, or you may have agreed to cover overheads for the branch location. You will also need to factor in costs relating to branding in and around the location.
Training
Your business model will be successful due to a key USP – whether your restaurant is themed, or your service is tailored to a specific demographic. Training will ensure your franchisee meets yours and your customers’ expectations.
