Franchising may be the next big step for clients in the restaurant industry and represents an opportunity for them to grow their brand. So, how do they know when it's the best time to franchise? Additionally, how do they know when their business can franchise? To answer these questions, they must evaluate whether or not their business can franchise and whether their individual and business goals align well with franchising.
While 2020 has thrown the economy for a loop, 2021 is slated to be a big franchising year. Strong performances in some parts of the restaurant industry and favorable real estate are helping to drive franchise sales into the new year to their highest in ages. But while this all sounds favorable, your clients need to know when it's the best time to leap at franchising opportunities.
Here are some things they should ask themselves.
The first thing they should consider is if their business model would benefit from franchising. A business is in a good position to franchise when it is duplicated without too much stress. Clients should consider what products or services they'll be selling and what costs would be included with each franchise fee.
Those who run a business already know the liabilities that come with it. But what about overseeing two locations or more? To protect against liabilities and legal risks, protecting their operations with a franchise insurance program provides peace of mind. The Franchise Select Program from RMS Hospitality Group provides financial and legal protection for franchisees and their owners through such coverage as general liability, excess liability, liquor liability, and more. Having this coverage provides a layer of legal safety when working to create a compliant and safe franchise expansion.
Franchising, while opportunistic, isn't for everyone. In addition to money and business sense, franchising requires patience, the ability to adapt to new challenges in an unpredictable economy, and good communication skills.
Franchising takes a lot of effort and can pull franchisee's attention and energy far and wide. Clients need to make sure they and their businesses are strong enough to take it on. They will find that it's impossible to predict the franchising process as they face many hurdles along the way.
Finding the right franchisees is another crucial part of deciding if it's time to expand. Clients should be prepared to take their time when selecting franchisees. They are an extension of the business owner and the business, after all.
Expanding a business into a franchise is more than just finding the right franchisee and real estate property. Franchising takes a lot of effort and time. Although eventually franchising allows the owner to take a more hands-off approach, and give much of the responsibility to their franchisees, they will need to devote a significant amount of time and resources to get the franchise going.
Clients thinking of franchising should consider transitioning from their current business to a franchise model as if it were launching a whole new business. They should be sure their current business can still stay afloat while they focus on the franchising process.
At RMS Hospitality Group, our expertly crafted policies are written specifically for the hospitality industry. We offer custom-tailored solutions to meet any venue's specific needs. For more information, contact our experts today at (888) 359-8390.
At RMS and associated firms, business continues as usual. Our staff is remote-capable and available to handle all partners, brokers, and insureds at the present time.
