What do you look for to determine whether your business can be franchised successfully? That all depends on your business. One size does not fit all. The following are some general criteria that you need to look at.
Do you have a unit prototype?
If you don’t have an operating business, stop. Go develop one. Run your prototype for a long while; make sure it works. Make certain you understand its ebb and flow, its seasonality, its customers, its suppliers, its competition, its positioning, and brand personality. Understand everything about it. After you’ve developed one location, develop another one, maybe more. Then come back.
You should have ownership of your trademarks and service marks, and they should be federally registered. Remember that franchising is all about licensing a brand. If you can’t give the franchisee clean use of your name, what are you licensing?
Is replication feasible?
Okay, so you have an operating business; now you need to ask yourself some hard questions.
- Can you deliver ‘the look’ to franchisees: the design, décor, signage, site criteria, and plans for construction?
- Are you able to tell franchisees how much it costs to develop the location – not just the fixed costs but the expenses from the day they meet you until the day they no longer have to fund working capital out of their own pockets? Remember that the franchisee is relying on you to be knowledgeable – especially when it comes to getting the business up and running.
- Do you have systems for operating your business? Remember – as a franchisor – you want your locations to run consistently so that every customer is delivered the same product, the same way, every time. Are you able to document those procedures in operating manuals, and do those procedures work all the time?
- Can you teach your system for operating the business to franchisees and their staff? Can you teach them in a reasonable period of time – or do they need to spend the next five years in class before they can open their doors?
Are your products and services any good?
Although having great products and services is no guarantee you’ll succeed, it sure can’t hurt. You need to find out the answers to the following questions:
- How do your customers view your products and services?
- Are they different from – better yet, are they superior to your competitors?
- Will your products and services carry to the next town, the next Province, or across the country?
Will your customers want your products and services tomorrow?
Things change rapidly today. Products and services often have a half-life equivalent to that of a fruit fly in September. What’s hot and ‘essential’ today could be a faint memory tomorrow. Here are some things you need to consider:
- Are consumer purchasing patterns changing, and will they affect the popularity of your products and services?
- Can other companies absorb your products or services? If they do, will that place you at a competitive disadvantage?
- Are alternatives to your products or services being introduced or even discussed?
- Do you have a strategy to adapt to changing market conditions?
You need to be alert that your business isn’t simply the latest fad. Franchise systems have to have a staying power and need to be built on a consumer demand that is growing and secure.