STREET SMARTS

To Franchise, or Not to Franchise?

Here's what you need to consider before franchising your business.

Norm Brodsky is a veteran entrepreneur.

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Dear Norm,
I'm the second-generation owner of a specialty gift shop and Native art gallery. We have been in business for more than 20 years. My challenge is to build the company while maintaining the high level of customer service that has become our hallmark. We have streamlined operations and standardized many store procedures. We cater mainly to a tourist market, but expanding to tourist centers in other cities would make hands-on management difficult at best. I am thinking about franchising, on the theory that a franchisee would be highly motivated to follow the plan and make it work. What do you think?

-- George Kiorpelidis, owner
Indianica, Montreal, Quebec

There's an old saying. that nothing happens until somebody sells something. The corollary is that you can't have a business without customers. So the first step in starting or expanding any business should always be to find out whether people want to buy what you plan to sell.

That was my advice for George. Before he spends money on a franchising consultant, he should investigate whether his idea has any appeal for potential franchisees. His plan was to target mom-and-pop stores in the tourist districts of other cities and persuade the owners to make the switch. I thought he was rushing the process. First, I suggested, he should find a couple of shops he would consider good candidates to carry his products, and then see whether the people are open to partnering with Indianica. Assuming they are, he can partner with them for a while. If that goes well, he can raise the possibility of franchising with them. No matter what, he'll learn a lot about the appeal of his concept.

In the meantime, I said, he should consider attending one of the many franchise conferences that are held around North America every year. He can go as an observer or as a potential franchise buyer to get a sense of how franchising operations work. He might also do some research on companies that could have franchised but chose to open their own stores instead. There's a ton of information out there, and most of it can be gathered at very little cost. George will be doing himself a big favor if he finds out all he can before he starts spending a lot of money.

Please send all questions to AskNorm@inc.com. Norm Brodsky is a veteran entrepreneur. His co-author is editor-at-large Bo Burlingham. Their book, The Knack, is now available in paperback under the title Street Smarts: An All-Purpose Tool Kit for Entrepreneurs.

Last updated: Nov 1, 2010

NORM BRODSKY | Columnist

Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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