While the first reaction may be that franchising your business is expensive – developing business plans, legal documents, operations manuals and marketing material cost money – these costs are quantifiable and recoverable with the sale of franchises in the long run.
The speed of growth is where the risk emerges. Franchises are effectively annuities, providing you with royalties over a long period of time. Franchisors looking for hyper-growth in the early stages see more risk because of the need to hire more staff to sell and manage the franchises and of course market them. Improperly managed, this can be to the detriment of the core business established.
More often than not, franchisor failures can be traced back to failed franchisees. Make sure you vet your applicants carefully to see that they’re capable of managing each unit to your level of requirements. Poor performing franchisees require more support and resources from you, and in return you get less or almost nothing in royalties.