Is Your Business Franchisable?
Franchising, as a growth strategy, may not be right for everyone. There are however, many businesses that we talk to that are ready to franchise. So, what is the difference and how can you tell if your business is ready to franchise?
There are a number of factors that we will look at when we evaluate the franchisability of your business, all of which can be broken down into three categories:
The Concept, The Operational Systems, and The Financial Metrics.
Things we consider when looking at the concept include:
- Appeal of the Product or Service to a Broad Market
- Is the Market for the Product or Service Growing or Saturated?
- Notable Competitive Advantages
- Level of Branding
Operational expertise is demonstrated by:
- Solid Systems in Place
Financial considerations for franchising include:
Profitability of the Business
- Win-Win Business for the Franchisee and Franchisor
- Adequate Return on Investment for a Franchisee
Do you have a proven track record of growth and profitability?
People buy franchises to learn from those who are successful. Growth and profitability are the standards that franchisees buy into. As a matter of fact, the first question a franchisee prospect usually asks is, “How much can I make?” If you’re not profitable, why would someone else want to buy your franchise? Depending on your situation, it may make sense to continue focusing on increasing your profitability before franchising.
Does your business have broad consumer appeal?
Not every business has the same appeal everywhere. Have you determined the market for your business and are these markets available for growth outside of your area? If your business is geared toward your local college campus, will it have the same appeal at other campuses? If you are providing a business service, do businesses in other regions have the same needs? Not every franchise needs to grow nationally to be successful, but they do need to have at least a regional appeal or a specific market appeal. Is your market segment large enough for your business to flourish on a regional or national scale?
Is it easy to replicate or duplicate?
A key to successful franchising is having a proven system in place and being able to teach others this system. Through hard-work you have created something unique, but to take the next step in franchising you must be able to teach it to others. Is your operation complex? Does it require a large number of employees to manage day-to-day? Are there specials skills or licenses required? Answering these questions will help you determine whether you have the ability to duplicate your operation, which is critical to the success of future franchisees.
Our team at The Franchise Edge is dedicated to working with Entrepreneurs at all stages of development and growth. It is important for you to better understand what it takes to franchise and whether your business is franchisable today or some day in the near future.
As a business owner, you will always be improving things and if you wait until you have everything “together” you may miss out on the opportunities that franchising provides. There is a balance between being ready to franchise and having it “all together”.
Many of the loose ends of the business are addressed during the franchising process as we standardize your procedures, marketing systems, hiring and other aspects of the business that a franchisee will need.
Our free Franchise Feasibility Analysis will answer these questions and provide you with our recommendations.
Contact Us for a Free Franchisability Assessment