As a successful business owner — answer these six key questions to determine if you have the core components of a successful franchise.
Is it Working?
In order to franchise a business, the business model must first be proven. There is no law, of course, requiring a franchisor to demonstrate competence, however, there is a certain number of practical considerations. In order to establish credibility to sell franchises, you will need to show you have a successful operation prototype.
Can you sell it?
In order to be franchisable, the business model also needs to be attractive to potential franchisees. While it is difficult to quantify “saleability,” factors such as credibility, uniqueness, and brand “sizzle” all contribute to sales success.
Can you clone it?
The key to success in franchising is making sure that your franchisees are easy to replicate. If the concept only works because of a unique location, a superstar salesperson, or because an owner is working 80-hours per week, it is going to be difficult to repeat the magic.
Ideally, a franchise concept should be relatively simple to operate and should be able to work in a variety of markets. Of course, potential franchisees can certainly bring some special skills or qualifications to the game — but that should not necessarily be counted on.
Can you provide the franchisee with a desirable return?
A franchisee who is an owner-operator will expect to get a return, both for the time they spend in the business as well as their investment in the franchise.
Are you committed to providing value?
The franchise business is largely about maintaining relationships. The most successful franchisors are typically those that are the most committed to making sure that their franchisees are successful.
Do you have the capital?
While franchising is a low-cost means of expansion, it is not a “no cost” strategy. A new franchisor will need capital to develop legal documents, manuals, training programs and marketing materials, not to mention a marketing budget for franchise lead generation.