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Suitability for Franchising

Do you own a business that could expand through a network of franchises? Consider if your business exhibits the foundation stones to form the basis of a successful franchise.

Historical Trading Performance

Franchising is about replicating a financial model that has already been achieved, so it is imperative that there be sufficient trading to give realism to any financial projections.

A Proven System

Good franchising requires the franchisor to have gone through the learning curve, identified the pitfalls and found appropriate solutions, the franchisee can then be shown a business model that works. The franchisee should be replicating a tried and tested business system, rather than experimenting with new ideas.

Branding

Strong branding is fundamental. People want to invest with a sense of pride, in a business that portrays a strong corporate identity and has a brand suitable for national or international recognition. If the trade name has been formulated around a local region and is unsuitable to travel nationally, it is best to formulate a new brand before franchising is undertaken. The brand should be simple and shout out the message of clarity, professionalism and quality.

Corporate Image

The corporate image of a business is portrayed through external signage, a protected brand, name, corporate colours, vehicle livery, corporate dress, website design, promotional material, own label products, stationery and whatever is appropriate for your business. It is important to develop strength of corporate image throughout all aspects of the operation.

Replicable

The basic business process must be teachable within a reasonable period of time. If your model requires special skills then the field of potential franchisees may be reduced. Bear in mind, however, that many franchisees are business people with suitable skills to run a business, and then employ staff who would already have any necessary technical skills.

Products and Services with Good Staying Power

Franchisees do not wish to make a long-term investment in a business which has a product or service which may be fashionable or become obsolete over time. Discerning prospective franchisees will be looking for product and service deliverables that are required through varied economic conditions.

Professionalism

Professionalism is manifested in how the telephone is answered, the quality of service provided, the clarity of written communication, the attention given to detail, a clear code of values and evidence of satisfied clients. Franchisees will be attracted by a professional approach to recruitment which involves the right body language and the approach to the franchisee at every level. That which portrays a lack of true professionalism can be a ‘switch off’ to the right people.

Sufficient Profit Margin

Franchising is not suited to marginally profitable low turnover businesses – there must be sufficient operating margin to sustain continued business growth and development, while also enabling both the franchisor and the franchisee to enjoy a reasonable return. The franchisor must receive a profit margin sufficient to provide good back-up and support and maintain a healthy research and development programme. The franchisee must have sufficient margin to build a rewarding business, given their commitment and dedication to replicating the proven system, and to recover their investment over the life of the agreement. It is important that any mark up on product supply or management service fee provides a win-win situation, that enables the franchisee and the franchisor to succeed together.