Franchising and the Seven Questions
Franchising your business could be the way to grow. Weigh up if this is the right model for you by asking yourself these seven questions:
1. Why do you want to franchise?
If you franchise well and effectively, it's a good long term strategy, rather than a 'get rich quick' scheme and, as in any form of expansion, there needs to be some investment in developing the current business as a franchise.
2. Is your business a proven success?
It should be in an established format, with a defined system, a distinctive name and appearance, and be making money. You need a minimum of 12 months trading history (ideally longer) to identify any seasonality issues, but also to ensure that the business model can be sustained.
3. Can the business be easily duplicated?
Which means can it be set up in a sufficient number of locations to create a franchise network of manageable and profitable proportions? Is there a local market need and would it work in every area or is what you do specific to your own local market?
4. Can someone learn about the business quickly and easily?
Franchisees will want to pick up on the business in a reasonable period of time.
5. Does the business create sufficient profits/margin to satisfy both the franchisor and the franchisee?
The way franchisors make their money is from charging their franchisees ongoing fees, so there needs to be enough money in the business model to be able to do this.
6. Can you adapt to a culture of mutual support and trust?
If you franchise, you have to recognise your responsibilities to assist your franchisees to create and operate businesses using the common brand and system.
7. And, finally, does the business model have attractive 'reasons to belong'?
Reasons that would make someone want to purchase a franchise rather than go off and set up their own business in the same activity from scratch?
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