Could Your Business be Franchised?

Over the years The Franchise Development Centre has helped many businesses to franchise their concept and recruit franchisees. Even during the economic difficulties of recent years, franchising has continued to grow and prosper, with the number of franchise systems, number of franchisees and number of people employed all growing significantly more quickly than the economy as a whole.

So, could you take advantage of franchising as a strategy to grow your business? When we look at a business that wants to franchise, or indeed when a prospective franchisee looks at a franchise concept they are interested in, we should consider what we call ‘Five Star Franchising’.

Firstly, does the business have a recognised brand and good trading history? This may not be a nationally recognised brand, but it does need to have a good local reputation in the locations in which it operates.

Secondly, can the business be duplicated in multiple locations? Here we consider if there are any specific factors which make the business successful in its home town that may not exist in other territories. The franchisor must be satisfied that sufficient potential exists for expansion prior to making the decision to launch the concept. The franchisee, as part of their due diligence, must investigate the potential in their own town or region, and be sure that there is a market locally for the product or service.

Then we look at if the business is easily learned, in a reasonable period of time. Some concepts may need only a few days training to teach their franchisees how to do what they do. Others may need weeks or months of training. The important thing here is not so much how many days training are included, but if this is sufficient for the franchisee to fully understand the concept and be able to operate it.

Another important factor to consider is the profit margin of your business. In franchising, there needs to be sufficient margin to allow both franchisor and franchisee to generate profits. Businesses that operate with very narrow margins are unlikely to suitable for franchising. If however there is good margin, sufficient for the franchisor to take a percentage and still leave enough for the franchisee to make a good profit in their business, then this point is satisfied.

Finally, a franchisor must have an understanding that their franchisees are business owners in their own right, and trust them with the brand and IP of the business. They must have a culture of support, and understand that their success will be wholly dependent upon the success of the franchisees. Likewise, the franchisees must understand that they are buying into a proven system, and must follow that system, and not go off and try and re-invent the wheel.

It is not necessary to excel in all of these areas before you consider franchising, but if you assess your business in the light of these basic criteria, it will give you an indication of whether you have the sort of business that could adopt a franchise strategy. 

For more information about franchising your business click here