The Dos and Don’ts of Attracting Franchise Investors - MBB Management

The Dos and Don’ts of Attracting Franchise Investors

franchise investors

If you plan on expanding your business, franchising may be one of the best routes to take. It will require careful planning and proper execution. One of the key steps in franchising your business is attracting investors – specifically those who specialize in franchises.

They will play a huge role in your success. So it is important to follow this guide of “do’s and don’ts” so you can make it easier to attract them. Avoiding the franchising mistakes will keep you afloat while being able to abide by the recommended tips provided down below.

With that said, let’s begin with our list of “Do’s”:


Develop a strong business model

You want your business model to be well-established and profitable. Franchise investors want to make sure they put their money down on a business that they know will succeed (and have a clear path to do so). If your business model needs work, be sure to make improvements where necessary.

Solidify your brand identity

Your brand’s identity should be memorable and attractive to both customers and prospective franchise investors. This is one of the key things to remember when it comes to franchising for beginners. You want your brand identity to mean something.

It wouldn’t hurt to invest in professionals that focus on branding. Also, putting together marketing materials that reflect your brand will also be a plus.

Conduct market research

If we’re being honest, the market as a whole makes the final decision. Especially when it comes to which business thrives (and which one doesn’t). This is where conducting market research comes into play.

If you pay attention to the trends and have ideas on how to cater to the needs and trends of your customers, then you will set yourself on the path to success. Remember, trends change all the time, so the market research must be consistent.

Offer ongoing support and training

As you are expanding and establishing franchises, they will require more manpower. Meaning you’ll need to provide support and training that is ongoing for your team. This way, it will ensure sustainable success for your business as a whole.

When franchise investors notice that you run your business like a well-oiled machine, it would be hard for them to say “no” to making an investment.

Plant your stake in the franchise community

Of course, no valuable information can be accessible without immersing yourself in the franchise community. It’s important that you consider the idea of attending trade shows, conferences, and relevant events with other businesses that establish franchises.

What’s even better is that potential investors are often found at these events. And that’s where you need to put on your networking hat and make the connections. Building such relationships will help increase your chances of landing these investors – especially when the time comes to approach for more capital for your business.

Consult legal help

It’s always a good idea to have an attorney familiar with franchising in your network. This way, they will be able to navigate through the proper channels and obstacles that may stand in the way. At the same time, it will help you avoid any pitfalls that can and will cost you money and time.

They are also knowledgeable in franchise regulations. It’s important that you comply with said regulations so your business does not face any penalties in the future – whatever they may be.


Rush into the process

As with any business, rushing into the process will create a recipe for disaster. You need to take enough time to make plans and prepare for building your franchise system. Rushing will lead you to make errors that will cost you time and money.
Worse, it will destroy any franchising plans you may have at the snap of a finger.

Neglect financial planning

Franchising your business requires financial planning. There’s no other way around it. Neglecting this all important task will lead to financial instability.

One of the leading causes of failure in business is the lack of financial planning and management. You’ll want to be as well-versed as you can to navigate the financial obstacles that come with running a franchise (and the whole business itself).

Fluff up the earning projections

Accuracy counts. Especially when it comes to the hard data franchise investors need in order to make a decision. You cannot afford to exaggerate or fluff up the projections.

Be truthful about it. Also, provide realistic projections based on the franchise’s existing performance.

Go forward without a legal strategy

Legal advice is essential. Plus, you cannot afford to cut corners in that regard. Doing this will lead to legal disputes and penalties stemming from regulatory violations.

Do not move forward without the help of a franchising attorney.

Failing to protect your brand

Brand protection is essential. You want to protect it from those who intend to use your intellectual property without authorization. This can lead to legal issues that can cost time and money.

Ignore feedback

This includes feedback from existing franchisees, your customers, and other important people who are tied to your business. If you ignore it, you’re going down a path that will lead to the sure destruction of your business.

Feedback – positive or negative – should be examined. And from there, they will serve as guiding posts to help you make critical decisions that will make your franchises (and the entire business) a lot better.

Final Thoughts

If you are considering the idea of attracting financial investors for your franchise business, you want to make sure you take this list of “dos” and “don’ts” to heart. The success of your business and its future will depend on you.

However, you need to make the best decisions possible. A bad one can lead to plenty of setbacks or worse – complete failure of your future business plans. You will also need to consult the proper professionals like a franchising attorney (for navigating the legal stuff) and others who will provide their knowledge and expertise on helping you make your franchising plans a success.

Leave a Reply

Your email address will not be published. Required fields are marked *