Here are more criteria that an entrepreneur can use to determine if franchising is the way to go for his business to expand and grow.
Affordability – Affordability reflects a prospective franchisee’s ability to finance for the franchise in question.
Return on investment – A franchised business must allow enough profit after a royalty for the franchisees to earn an adequate return on their investment of time and money.
Market trends and conditions – While not an indicator of franchisability as much as a general indicator of the success of any business, market trends and conditions are key to long-term planning. Is the market growing or consolidating? Will the franchise’s products and services remain relevant in the years ahead? What are other franchised and non-franchised competitors doing? And how will the competitive environment affect your franchises likelihood of long-term success.
Capital – While franchising is a low-cost means of expanding a business, it is not a “no cost” means of expansion. A franchisor needs the capital and resources to implement a franchise program. A major reason for the failure of franchise systems is the franchisor relying on non-recurring revenue from over optimistic franchise unit projections.
Commitment to relationships – Successful franchisors focus on building long-term relationships with their franchisees that are mutually rewarding. Strong franchisee relationships enable the franchisor to sell franchises more effectively, introduce needed changes into the system more easily, and motivate franchisees to provide a consistent level of products and services to the end user.
Strength of management – Probably the single most important aspect contributing to the success of any franchise program is the strength of its management. In franchising you bet on ‘jockeys’ rather than ‘horses’. The product or service is important but the quality of the leadership is critical, especially when the system has to be modified to adapt to changes in the marketplace.
Measuring a business against these 12 yardsticks will enable the owner to answer the question: “Is my business franchisable?”
Source: www.ifranchisegroup.com
Photo: From va.gov