If your business is well-established, you might be thinking of making it grow even more by going the franchising route.
Franchising can be a fast, low-cost means to expand your business. F you’re operating in Metro Manila, your coverage can quickly spread to other provinces, cities, and towns. You can even go national or international.
Not every successful business is franchisable.
Your business model has to be replicable. It has to provide adequate returns on the investments on franchisees. It has to be different from other competing models or concepts. It has to have a good set of managers driving its growth.
In short, not every successful business is franchisable.
Franchise group offers 12 criteria by which growth-oriented enterprises can assess if franchising is the the way to go for them.
Credibility
To sell franchises, a company must first be credible in the eyes of its prospective franchisees. Credibility can be reflected in a number of ways: organization size, number of units, years in operation, look of the prototype unit, publicity, consumer awareness of the brand, and strength of management, to name the most prominent.
Differentiation
In addition to credibility, a franchise organization must be adequately differentiated from its franchised competitors. This can come in the form of a differentiated product or service, a reduced investment cost, a unique marketing strategy, or different target markets.
Transferability of knowledge
The next criteria of franchisability is the ability to teach a system to others. To franchise, a business must generally be able to thoroughly educate a prospective franchisee in a relatively short period of time. Generally speaking, if a business is so complex that it cannot be taught to a franchisee in three months, a company will have difficulty franchising. Some more complex franchisors offset this handicap by targeting only franchise prospects that are already “educated” in their field (e.g., a medical franchise targeting only doctors).
Adaptability
Next, measure how well a concept can be adapted from one market to the next. Some concepts (e.g., barbecue) do not adapt well over large geographic areas because of regional variations in consumer tastes or preferences. Others (e.g., medical practices) are constrained by varying state laws. Still other concepts work only because they are in a very unique location. And some work because of the unique abilities or talents of the individual behind the concept. Finally, some concepts are only successful based on years of perseverance and relationship building.
Refined and successful prototype operations
A refined prototype is necessary to demonstrate that the system is proven, and is generally instrumental in the training of franchisees. The prototype also acts as a testing ground for new products, new services, marketing techniques, merchandising, and operational efficiencies. The occasional exception to this rule is with companies whose franchises involve the direct sale of a proprietary product or service.
Documented systems
All successful businesses have systems. But in order to be franchisable, these systems must be documented in a manner that communicates them effectively to franchisees. Generally speaking, a franchisor will need to document its policies, procedures, systems, forms, and business practices in a comprehensive and user-friendly operations manual and/or computer-based training module.
(to be continued)
Photo: From franchisedevelopmentsystem