Is your fitness business suitable for franchising?

With the right foundation, franchising can be a very effective way of expanding your business and quickly growing your brand, writes Stefan Kazakis.

While the trend for franchising has in recent years slowed down from the rapid rates seen in the 1990’s to early 2000’s, it is still a popular and potentially exciting method of growing your business.

The decision to travel down this route, however, is often the result of a ‘bright shiny light’-driven campaign rather than a well thought out plan. And, as the saying goes ‘failure to plan is planning to fail’. With the right foundation, though, franchising can be a very effective way of expanding your business and quickly growing your brand.

For well run businesses, with systems and processes, procedures and rules, franchising will provide benefits and satisfaction for both franchisor and franchisee. However, be under no illusion that it is an easy path to take. Establishing a business model that can be considered for franchising has to be undertaken with education, skill, patience and, not surprisingly, capital.

So how do you know when your business is ready to be considered for franchising? Here are seven key considerations:

  • Profitability. Proof of concept, establishing a franchise system and preparing it for market can take as long as three years. The business needs to be making a healthy predictable profit – this is non-negotiable.
  • Not dependent on one individual. The business needs to be making a positive cash flow without the key/critical staff being present. Having the right management structure is also non-negotiable.
  • ‘Moderate uniqueness’. There needs to be uniqueness – but not extreme uniqueness. The best uniqueness is often found in a customer delight system.
  • Processes. The business should have a predictable operations procedure with good systems and ‘How to’ manuals for all tasks, including the testing and measuring of all activities (KPI’s).
  • Lead generation. The business needs to have a defined and proven lead generation system that delivers leads within a cost per lead budget.
  • Sales conversions. The business needs to have a progressed and defined sales system that ensures at least 60 per cent conversion on all leads, regardless of the sales skills of the person selling.
  • Culture. The business needs to have a strong culture of open and honest communication.

So what should you do if you believe that your business has what it takes to become a franchise opportunity?

  • You need to be assertive but fair. You need to be clear on the vision. Who needs to do what by when?
  • You must continue to work harder with even greater focus. You are now accountable to other business owners who are buying into your vision – being a franchisor is not for the faint hearted.
  • You need to have strong ownership of the brand and the ability to share it with a new network of business owners who must and will embrace it as their own. You must be OK with this.
  • You must be accepting of the fact that you will no longer be the sole source of ideas about how the business should operate – in fact, you should encourage input from the new business owners who are buying into your vision.
  • You should take legal advice and have a Franchise Agreement developed by an authentic and reputable franchise development and legal team. It should be noted that the investment for this is a minimum of $70,000.
  • You should develop a training division/process for all franchisees, comprising internal and external consultants/trainers.
  • You should have a recruiting system for franchisees that is more about de-selection than selection. You need a system for saying ‘thanks but no thanks’.

So how do you tell when your business is suitable for franchising? In a nutshell, it’s when you know your business inside out! Your business is ready for franchising when you are not motivated about the initial capital investment by a franchisee. Ultimately, you will be ready when you already have enough money in your bank account; you will continue to invest in the training of your franchisees, ensuring the reputation of your brand and concept continues to grow.

The most important piece of advice I give to clients who ask about franchising is to ask themselves ‘Am I ready?’ Even the best laid plans will result in failure if the underlying business model is not ready for franchising.


Stefan Kazakis is a business strategist and founder of Business Benchmark Group, which helps clients from a variety of industries seize opportunities to achieve ongoing business success and profit growth. Email info@businessbenchmarkgroup.com.au or visit businessbenchmarkgroup.com.au