Franchise or Chain

[triplefire]

Hello

I am new to the forum, would like to gather some advice on expanding my business. I am in the health industry, and we provide pain management services such as low back pain, arm pain etc.

There are two options for my expansion.
1. Franchise
2. Chain

Franchise is less profitable, and the initial investment is minimal for the franchisor. I now only have one clinic.
My question is why would someone trust my brand name?? If I had 5 clinics sure, the quantity explains how successful I am doing. However I believe there is a beginning for every franchisor, starting from one towards many.

Chain business is more profitable, but investment cost is high, plus it is more time demanding compared to franchise. The risks are higher too. Searching for employees who are likely to stay more than 3 years is unheard of in my profession. As practitioners build their client base, they tend to leave.

How shall my thought process be at this moment, while I am deciding between Franchise and Chain? There must be some criteria that I must meet before even considering franchise.

My gut feeling tells me I shall start with chain, as I grow to 3 clinics, then I could promote my practice to possible franchisee’s/investors.

Your advices are valuable, thanks a million

[Paul]

If your existing operation is profitable and can be duplicated you don’t need additional units before you franchise. Obviously having a few more locations looks a bit better to franchise prospects but it may actually delay your expansion.

The most important part is NOT “branding” in your case. The most important part is a viable profitable working model that can be duplicated. You are not a restaurant chain that depends on name recognition and heavy advertising.

Rather than trying to open a few more on your own, concentrate on developing the systems and infrastructure that would make a franchisee successful.

The hardest technical part of franchising is developing the actual systems and operations manual that your franchisees will need to be successful. This is not quite as easy as it may seem. Even if the existing system is profitable it will need to be reviewed and adjusted to be easily duplicated. Everything from buildout, equipment, staffing, licensing and all aspects of operations MUST be clearly defined in detail for your franchisees. That is what they are buying, not necessarily a “brand”.

I’ve been involved with franchising for quite a while and can go on and on about it; but for now I just wanted to respond to your concern about additional units.

[chrismarklee]

I worked for a major Income Tax chain. I worked for an owner and corporate. I saw what the fees the corporate charged the owner. He failed and he was a top producer too. I do not like chains or franchises. Corporate dedicates rules on what you can and cannot do too. Talk to an owner who failed in the chain you are looking to get into.

[triplefire]

Rather than trying to open a few more on your own, concentrate on developing the systems and infrastructure that would make a franchisee successful.

The hardest technical part of franchising is developing the actual systems and operations manual that your franchisees will need to be successful. This is not quite as easy as it may seem. Even if the existing system is profitable it will need to be reviewed and adjusted to be easily duplicated. Everything from buildout, equipment, staffing, licensing and all aspects of operations MUST be clearly defined in detail for your franchisees. That is what they are buying, not necessarily a “brand”.

I agree with you Paul. I am now more clear, I shall build an operational manual of my profitable practice.

With Franchise, I know there are franchise fee, loyalty fees, shared advertising fee, and termination penalty. I assume those are important topics to discuss in the contract. I read McDonald charges 5% loyalty fee, and a high franchise fee. How do we dictate the fees? There are possibly hundred of answers.

Thanks a million