Is Franchising suitable for your Business


Add this to your website

What is Franchising

A business ‘partnership’ in which one party permits the other ‘partners’ to replicate a proven business system, operating under a common brand, in return for initial and ongoing fees. It allows a third party to legally copy your business in exchange for an upfront payment and ongoing management services fees.

To franchise a business you need the following factors:- 

  • Sufficient development capital to establish a franchise system
  • High enough margins to share
  • Existing business network or ‘pilots’
  • Easily transferable knowledge
  • Identifiable brand or trademark
  • Expansion requires investment into property, equipment and staff

The Benefits

  • Franchise fees will generate a stream of capital income and ongoing revenue
  • A loss of profit margin will be offset by much larger overall revenues
  • Motivated franchisees ‘running their own businesses’ will generate higher per unit income than employees

What can be franchised?

  • Very diverse range of businesses
  • Proven business systems capable of replication
  • Profitable businesses financially viable for both parties and financially secure
  • Steady or growing demand for your products or services
  • Simple business formats that are easy to learn
  • Identifiable brands and trademarks with your own distinctive image or concept

Undertake a SWOT Analysis of your brand

Trading History

  • How long have you been in business?
  • What is proven?

Profit Margins

  • Are these above average industry benchmark?
  • Is there enough margin for two?

Market

  • How big is your market?
  • How volatile is your market?
  • Does it have mass appeal?

Products

  • Is there consumer acceptance of your product?
  • Is your product or service easy to sell and deliver?
  • Quality record?

Brand

  • Is your Intellectual Property protected?
  • Is there a unique and distinguishable marketing approach?
  • What is your reputation in the market place

Business Management

  • Do you have the management skills and capacity to create a new culture?
  • Is your business professional and well presented?
  • Is your management financially skilled?
  • Do you have well documented processes and systems in use?
  • How is Information Technology used in your business?
  • What is your attitude to risk?
  • Is there a commitment to research and development?

Franchise Opportunity

  • Do you have sufficient access to development capital to fund growth?
  • Are there similar franchises already on the market?
  • Will the franchisee be able to control their costs?
  • What will be the minimum term?

Reasons for failure

  • Growing too fast too soon
  • Franchising for the wrong reasons
  • Lack of planning
  • Selecting the wrong franchisees
  • Lack of infrastructure and support
  • Failure to take proper advice
 

Review your SWOT

Do you have the key criteria you need to franchise

  • Developed systems of operation and staffing
  • Defined image and clear market position
  • Proven and successful business model
  • Sustainable market and source of ongoing clients
  • Easily duplicated management systems
  • Profitability for both parties
  • Mutual respect and support – partnership
  • Will your operating experience and culture allow you to develop a franchise operation?
  • Are your products or services suitable for franchising?
  • Is your Brand sufficiently well developed and strong enough to deliver a worthwhile advantage to a franchisee?
  • Is your financial position strong enough to support a franchise network?
  • Is your business system proven, robust and capable of being learned by a franchisee?

Information supplied by the Create Project

 

 

Back to Growth and Succession


Need Help?

Our business coaches are here to help. Find out more about our business coaching services or email us at [email protected] to arrange a chat with one of our coaches.

 

 

 

 

 

contactuslogo