There are a number of variables that a company should consider before embarking on a franchise development program. As a first step in determining the viability of franchising your business, you should consider the following questions:
1. Does the company operate following prescribed processes and procedures (whether oral or written)?
2. Can others be trained to duplicate the business system?
3. Is there more than one place now in operation?
4. Industry is projected to grow?
5. Will the current business operation to serve as a prototype for the franchise model?
6. Have been identified existing staff members who provide training franchise and ongoing support to franchisees?
7. Is the business profitable?
8. Profit margins are sufficient to allow a percentage of gross sales payable by the dealer to the company in royalties and still provide a fair return for the franchisee?
9. It is the only business in your industry?
10. It has the “ideal” Franchisee been identified?
11. Of individuals / investors expressed interest in opening a “franchise” of the company?
12. Are there economies of scale in relation to the functions of purchasing, advertising and administrative will increase as you add other locations?
13. It is projected that the initial investment in connection with the purchase and the start of the franchise (ie, franchise fees, equipment, supplies, materials, etc.) allow the franchisee to obtain a return on investment fast enough?
14. Are there aspects of ownership of the franchise?
15. It is the business of a new concept?
16. Having “sourcing” of equipment, products and supplies have been established?
17. Does the company offer a result of sales / marketing program for franchisees?
18. Does the company support in securing customers for the franchisee?
19. You can “exclusive franchise territories” set?
20. Does the company have a good reputation among consumers and providers?
While few companies can answer “yes” to all questions, the number of positive responses is a good indicator of potential franchise your business. An experienced franchise consultant can help you to fully determine whether the franchise business is right.
Tags: business operation, business system, franchise development, franchise fees, franchise territories, franchisee, franchising business, gross sales, initial investment, profit margins