Before implementing a franchise program, a company should evaluate itself on several criteria. An important consideration is the success of the initial or pilot operation. If the products or services offered have found reasonable acceptability and if these products or services are readily adapted to other areas, then the market potential for the franchise may be good.
Does the company have a marketing niche that can be used to its advantage? It the business similar to many others in a crowded business segment and, if so, is there a targeted customer bases so that advertising and selling can be focused effectively?
It is important to note that to be successful, a Franchisor must have some degree of distinctiveness, or the potential to achieve distinctiveness, in its business segment. If it does not, it will have difficulty attracting high caliber Franchisees in an increasing competitive market for such persons.
A franchise may be distinctive in terms of its products, services, operating and delivery systems or marketing. If a business is to be successfully expanded by franchising its success must be attributable to its products or services, business format, operating or management systems or marketing. It cannot be attributable merely to the unique character of its founder or its location.
The elements of the success of the business must be teachable to persons with capabilities that exist among prospective franchise buyers and must be replicable by such persons. To be successful, a franchised business must appeal to high caliber franchise buyers and compare favorably with other franchises.
The investment requirements of the business must be realistic and the potential for a return on the investment should be appropriate to the risk inherent in the type of business.
Any operating, marketing and financial problems should be addressed and solved, for the Franchisee must receive a tested and refined business format.
Before evaluating your business as a potential franchise, evaluate yourself as a potential franchisor. Are you ready to share your success, your system and your profit with other people? Consider your qualities and remember that franchising is more than the business of selling services and products to consumer. In addition, as a Franchisor you will be an educator, Trainor and hand-holder to your Franchisee.
If you think your business might be franchisable then you will need to offer Franchisees a business format which includes you brand business system, training, opening assistance, marketing and support services under the contractual terms of a franchise agreement which will, amongst many other things, set out the financial arrangement.
Considerable development work is required before you will be in a position to draw up offer documents and begin recruiting Franchisees.
As a Franchisor you will be building a brand with a reputation that other people will want to buy and invest money into.
You will therefore need a brand, which is distinctive and appropriate for all the places you would want to have Franchisees in operation.
It will also be your responsibility, and your obligation to Franchisees paying for the benefit of using your brand, to protect it against abuse, both by outsiders and by ex-Franchisees.
Author: Rudolf A. Kotik of RKFranchise.com