Franchising your business...Pros & Cons

I have an artificial grass company in Scottsdale, Arizona called Paradisegreens.com I have owned this business for eleven years in AZ. I have been getting a couple people interested in doing a franchise in other states and one in Canada wanting to do a license deal. I have been talking to www.wcibroker.com that did Massage Envy among others that feels this is a great opportunity for me. They have been up front in how costly it will be ($100k) and how much work is involved. The license deal sounds possible with the person in Canada and would license just their area. I would love to hear from other business owners their feedback that have been in my shoes and what avenue they pursued and what I should truly expect. Thank you in advance for anyone that would share their insight.

 

 

Good luck with that awesome idea.

 

I own a franchise for one of my biz and probably wouldn't buy another one unless it had something really special to it or properitary.

Franchising is very complicated and difficult to do correctly/legally. It needs to be a great business to get to scale and it's just not worth the effort and expense unless you fully expect and need to reach that scale. You will need a good group to help with managing franchise law, the pipeline, zee/zor documentation and management, regulatory, etc, etc. I've lived it before and it was very difficult to find time to run the business I was working to franchise. IMO, nearly every franchise group you see with only 10 or so units is not complying with franchise law. It's too involved to do for only a few units.

 

I'd suggest talking to a few franchising groups to find out everything involved and how they can help you. The good news is they can really spoon feed it to you but it comes at a price...

Charlie, I can only offer you book knowledge on this, but there is a book I was reading some years ago: Franchising and Licensing: Two Powerful Ways to Grow Your Business In Any Economy. One of the things the book pointed out is what CHADW above is saying, about the complexities and difficulties, but there are also many ways that an entrepreneur can get screwed-over in trying to franchise. The book give various case-studies and examples, and IMO would be good to check out.

 

Good luck if you pursue it though!

Please make sure the name of your business is fully registered in Canada prior and that you are its only lawful owner. Otherwise, the person who operates the franchise may register the name first and becomes its lawful owner in Canada so in the future when you have more Canadian franchises you will actually need to seek his approval first which naturally means you cut him a portion of your profit. Essentially, he is licensed to print money.

Good luck with that awesome idea.

 

I own a franchise for one of my biz and probably wouldn't buy another one unless it had something really special to it or properitary.

 

 

 

Very good point and something that was mentioned by the broker. What is unique is we can get the Franchise in the local Home Depot's and also do installs for Costco. We also have several artificial grass products that are an exclusive for our company which are our best sellers.

Franchising is very complicated and difficult to do correctly/legally. It needs to be a great business to get to scale and it's just not worth the effort and expense unless you fully expect and need to reach that scale. You will need a good group to help with managing franchise law, the pipeline, zee/zor documentation and management, regulatory, etc, etc. I've lived it before and it was very difficult to find time to run the business I was working to franchise. IMO, nearly every franchise group you see with only 10 or so units is not complying with franchise law. It's too involved to do for only a few units.

 

I'd suggest talking to a few franchising groups to find out everything involved and how they can help you. The good news is they can really spoon feed it to you but it comes at a price...

 

Yes, the broker has been up front on how much time this will take away from my existing businesses which is a concern of mine. Risk verse reward is high on both fronts. That is why I am hesitant to put something else on my plate.

Charlie, I can only offer you book knowledge on this, but there is a book I was reading some years ago: Franchising and Licensing: Two Powerful Ways to Grow Your Business In Any Economy. One of the things the book pointed out is what CHADW above is saying, about the complexities and difficulties, but there are also many ways that an entrepreneur can get screwed-over in trying to franchise. The book give various case-studies and examples, and IMO would be good to check out.

 

Good luck if you pursue it though!

 

 

Great idea Wheels! I will order this on Amazon tomorrow! Thank you!

Please make sure the name of your business is fully registered in Canada prior and that you are its only lawful owner. Otherwise, the person who operates the franchise may register the name first and becomes its lawful owner in Canada so in the future when you have more Canadian franchises you will actually need to seek his approval first which naturally means you cut him a portion of your profit. Essentially, he is licensed to print money.

 

Yes, excellent point. I will bring this up on Monday! Thank you!

 

If you don't already have a franchise lawyer in Canada, I can refer you to one. He works in a smaller firm in Toronto, where he focuses on franchising.