Our friends at Point Franchise kindly put together some advice and costs on those who are leaving the Armed Forces and looking at this as a second career.
So, you’ve had a business idea which you’ve been running successfully for some time. You have growth ambitions, but how can you achieve this alone? Well, you don’t have to. Franchising your business is a great way to expand a proven concept by using the capital of your franchisees to fund the growth.
Of course, proving that your business is capable of being franchised through a pilot and then developing the business model takes significant franchise investment.
Here we’ll review the true costs associated with franchising your business.
The pilot phase
Before you can even consider whether you could become a franchisor, you have the job of creating a tried and tested business model which will provide an adequate return on investment for prospective franchisees. It’s your responsibility to prove your franchise idea, and the cost of doing so is also down to you.
The best way to demonstrate that your business is capable of being franchised is to run a pilot operation. To do this, you’ll need to develop a franchise model which can be replicated in due course if the pilot is a success. It’s tough to put an exact number on the cost of setting up a pilot operation. It will vary hugely depending on the type of business you’re piloting. Also, if you’re trying to prove an existing business, then only a few tweaks may need to be made to adapt it into a franchise. However, if you’re starting a new venture from scratch, the cost of developing a pilot will be quite substantial.