TEN GOOD INDICATORS OF “FRANCHISABILITY”

While franchising is certainly an extremely popular method of business expansion, it is clearly not right for all businesses. To become a successful franchise, most businesses should posses most of the following ten key indicators of “franchisability” in order to have any real chance to achieve franchise success. While it is possible to develop a successful franchise without one or two of these key criteria, all are important and should be carefully considered and fully developed when creating any new franchise program.

 UNIQUENESS   A new franchise needs to be somewhat different from any existing franchised competitors. Differences can include such important factors as a lower initial investment, more attractive franchise arrangements and payments, innovative marketing campaigns, alternative marketplaces, unusual characteristics of either products or services, different management approaches, specialized decorations and promotion themes, and even unique corporate images.

 WORKING PROTOTYPE   Innovative hot new concepts are one thing, but being able to see, hear, taste, feel and even smell the world of a working prototype can go a long way in making a business model truly believable. Not only can an existing successful prototype help make a business more real and desirable to prospective franchisees, it can also be the best place to train new franchisees, try out new products and services, test new marketing concepts, promote brand name merchandise, develop better management practices, and improve overall efficiency and effectiveness. The value of a working prototype clearly goes far beyond the actual revenues it produces. It shows that your business concept is one that really works.

 REPLICATION   In order for an existing business to become a successful franchise, it must be fairly easy to replicate the prototype in other areas and under other management. If a business requires certain special conditions or elements that cannot be recreated or delivered elsewhere, the chances that others can successfully operate a similar business in another location can be quite slim.

 ADAPTATION   In order for a franchise to achieve truly widespread success, it must be easily adaptable to meet the needs of many different marketplaces. Unfortunately, some businesses that are huge successes in their original location can quickly prove to be unprofitable disasters when transferred to a new area. There are many factors that can be attributed to such failings, including various local and state regulations, advantageous original locations, different consumer tastes and preferences, specialized skills of key personnel, unique business relationships, superior entrepreneurial efforts, and even a bit of luck. A good franchise offering is not dependent upon such factors for its ultimate success and can be successfully replicated in almost any good location.

 EASE OF TRAINING   In order for new franchisees to become successful, they must first be able to quickly and adequately learn the unique systems, procedures, and specialized knowledge that is required of the business they wish to operate. Ideally, this vital education should take less than three months of training. Should an existing business be so complicated that typical entrepreneurs cannot learn the necessary skills to run their business, the chances for franchise success could be severely reduced. One solution, however, to such training difficulties is to focus on marketing the franchise to highly specialized, well trained professionals who already have a great deal of education and experience in the specific field to which the franchise is targeted.

 COMPREHENSIVE DOCUMENTATION   Communication is vital to the eventual success of the franchisees. They must be able to understand, employ and document all necessary business systems and procedures. Therefore, the franchisor should maintain accurate and current records of all systems, procedures, policies, forms, and practices. Whether recorded electronically or through traditional paper manuals and reports, all necessary systems should all be thoroughly documented in such a fashion as to be easy to comprehend, easy to use, and easy to access by all authorized personnel.

 PROFITABILITY   An entrepreneur investing serious money in a serious business has the right to expect a serious return on his investment, time and efforts. While this may seem obvious, the fact is there are many important factors to consider when determining if a business concept has the potential to be profitable when operated by a different entrepreneur in a different location. Not only must such costs as rent, insurance, advertising, employees, goods and services, etc… be fully considered, but the entrepreneur must also make an acceptable profit after making any required royalty payments as well. Therefore, any proposed business model must take into account the financial needs and expectations of prospective franchisees before investing a great deal of time, effort, and expense in developing what may prove to be an interesting, but ultimately unprofitable business opportunity. A good rule of thumb is that profitable franchise offerings should be designed to produce at least a 20% or better return on investment within two to three years of full-time operation.

 ABILITY TO EXPLOIT NEW MARKET TRENDS   In such volatile economic times the only thing business owners can count on is change. Great franchises often result from insightful observations of hot new trends and market mood swings. The ability to react quickly and exploit great business opportunities resulting from new trends and market changes can be the key to achieving franchise success. Very often thriving businesses realize their window of opportunity may not last as long as they wished. Building individual company-owned units may take far too long as once-eager consumers move on to a more aggressive franchised competitor. Through franchising, businesses that are able to recognize, adapt to, and profitably exploit hot new market trends can quickly establish themselves all over the country, even worldwide, and beat envious competitors to the punch. Once fully established with good locations and a loyal customer base, such franchises can enjoy a tremendous competitive advantage, leading to sustained prosperity.

 AFFORDABILITY   Good franchise offerings must not only make good business sense to prospective buyers, they must also be affordable for the consumers most likely to actually purchase such opportunities. While franchises range in cost from a little over $500 to well into the multi-million dollar range, your business model must be affordable to those specifically targeted by the franchise marketing campaign. Because franchising offers many attractive ways to generate income for the parent company, many franchisors choose to price their offering at a reasonable initial investment in order to grow quickly, and dramatically increase opportunities for exponentially increased profits.

 CREDIBILITY   Perhaps the single most important indicator to consider, a business must be thoroughly professional, well organized and completely credible in order for prospective entrepreneurs to invest significant sums and their financial future with any franchise offering. There are many ways to establish credibility, including the history and track record of the parent company, the reputation and abilities of those in charge, the overall appearance of working prototypes, marketing effectiveness, positive brand image, consumer loyalty and public recognition. Without credibility, the parent company has little chance of franchise success, but once credibility has been established, prospective entrepreneurs may soon become eager new franchisees.

The best way to properly evaluate the “franchisability” of your business and its potential for franchise success is simply to contact us and arrange for a FREE CONSULTATION at your convenience. We’ll help you thoroughly investigate all necessary factors and requirements, explain each step of the franchise process, and advise you as to the wisdom and feasibility of franchising your business.