Virtual Entrepreneur

Is Your Business Franchiseable?

May 19th, 2006 | Author: MrMoney

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via Mark Welford – Franchise Business Opportunities

The Bfa:
The franchise method is now used successfully by all sorts of businesses in all sorts of markets; but not all businesses are franchisable. If your business has one or more of the following characteristics, franchising may not be suitable:

A product or service which is only likely to have a market for a short time (e.g., toy hoola hoops);

Gross margins which are too low to offer a return on investment to both you as the franchisor, and your franchisees (e.g. newspaper delivery);

Skill levels for each operating unit that require very long training periods (e.g., management consultancy);

Predominantly repeat business customers whose loyalty relates to the individual providing the service and which would be difficult to transfer to a brand (e.g. marriage counselling);

A geographically defined market that doesn’t have the potential to be repeated in many places (e.g. Tower of London);

A business with audit and control requirements which are too critical to involve franchisees operating as separate legal entities (e.g., a bank);

A business which is failing.

If you think your business might be franchisable then you will need to offer franchisees a business format which includes your brand, business system, 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.