Franchising Insights From Consumer Partner Caroline Liddon

Many articles have been written online discussing the pros and cons of Franchising your business. And for sure, it’s not something any business should walk into with its eyes closed.

It is without doubt an excellent way to increase your company’s topline and, if done correctly, at vastly improved net margins.

But the path can be riddled with complications if you choose the wrong franchise partner, fail to understand and address the potential impact on your own internal structure and don’t approach it with a ‘local mindset’.

Below is our simple checklist for you to consider when deciding if Franchising is right for you, your business and ultimately your shareholders.

Whilst this checklist is by no means exhaustive, our top Benefits & Considerations have been pulled together to provide you with a springboard for a company debate and to assist as a framework for future planning and decision making.

Benefits

• Increased turnover with reduced risk. franchising is one of the greatest growth strategies.
• Direct positive impact on net profitability.
• Expansion with no contingent liability.
• Improved cost:sales ratio.
• Improved company valuation driven by faster growth, increased profitability ratios and an established scalable growth model.
• Increased brand awareness.
• Improved buying power through scale.
• Reverse season buying opportunities depending on target regional expansion.
• Increased speed to market

Considerations

• #1 Choose the right Franchise Partner.
• Initial investment – there will be several up-front costs that will need to be taken into consideration, in addition to potential internal restructure.
• Engage an experienced Franchise Lawyer to ensure the final Contract is fair and workable for you.
• Payment Terms: Royalty on sales vs commission on goods purchased.
• Registration and compliance.
• Select relevant Regions/Countries for trading.
• Ensure your product is market appropriate.
• Local Seasonality awareness.
• Loss of complete brand control.
• Potential for conflict with Franchisee – how to deal with this.
• Franchisee Training – Brand identity, values and service levels.
• Agreements on expansion timeframes and locations within malls, malls within cities, and cities within countries plus an Online presence.

Hopefully this has provided some food for thought. If benefits of operating a franchise model is something you feel is right for your company and it would underpin your company’s future growth (top and bottom line), we can speak to you in much more detail about the process.

At PACP, we have a team of experienced professionals with extensive tenure in Franchise Management that are available to help and guide you through to success.

For more information, please contact caroline@pa-capitalpartners.com