When considering whether to franchise your business, one of the initial questions is, could a model of your business be offered to people already in your industry who are looking for a better system? This is a tough question to answer in most cases because each existing business has a unique set of circumstances, variables, personality traits and other elements that can drastically affect the way your franchise system will be owned and operated.
I have worked with a number of franchise systems that have great models for conversion franchising. The Weave Shop is an African American hair care business that has opened 16 locations over the course of the last 18 months. The concept is fresh, new and cutting edge. This is a good example of a business system that could work for an existing salon in converting their business to a franchise. Also included would be the Restoration 1 franchise model – here, the franchise model basically consists of a marketing system used to generate leads for the restoration business. In some cases, existing restoration businesses make ideal candidates as Restoration 1 franchise partners. There are many more examples of franchise models that also could fit into the conversion franchise model.
To begin, what is a conversion franchise opportunity? It is quite simply when an existing, operating business converts it’s operating system and trade name to that of a franchise system. The brand, operating procedures and business model converts to what is in compliance with the accepted franchise relationship. The benefits to this franchise model are that the operator shouldn’t need much training and support because they already get the business model. There also will be less of a “ramp up” time because the business is already generating cash flow in most cases. The downside to this model is that the operator is in most cases already “set in their ways” meaning that it can be difficult to change the way they think and operate. It also can be difficult to convince a conversion franchisee to pay an upfront fee and “buy in” to a franchise system when they are already operating the business you are selling to them.
In my experience, conversion franchises are not the typical franchise transaction. Over the past two years, I have been part of over 150 different franchise transactions and only two of them would be considered conversion franchises. That doesn’t mean that it isn’t a valid franchise strategy, after all, Ace Hardware has used the concept of conversion franchises for years with great success. My advice, don’t plan on the conversion franchise, but also don’t rule it out as a potential partner opportunity. As they say in marriage though, “don’t plan on your partner to change just because you married them”.