At FBDS, we advise our clients wishing to franchise their businesses to consider the following factors to determine if the business is ready to be franchised. Our business-to-franchise feasibility analysis reviews the current state of the business, with the goal of determining: if it has proven business systems; if it is profitable enough for the owners and the potential franchisee; if it has the capacity to provide needed support to franchisees, among others.
Irrespective of the diversity in nature and industries of businesses, some of the relevant benchmarks we examine in determining our clients’ readiness to franchise include:
Is the management experienced and ethical with a history of financial and personal accomplishments? Again, disposition of management towards franchising is key to success in franchising. It is good to note that franchisees are not employees but business owners who must be treated with respect. A franchisee should be given the required sense of belonging by being reserved the right and opportunity to have their ideas and suggestions heard and implemented where relevant.
Is there sufficient consumer demand for the company’s products and services, and is that demand established in a way there is future prospect for continued or growing demand for the company’s offering.
The management of the franchisor business is expected to be committed for the long-term. Managing franchisees can be quite demanding and sometimes the franchisee can be provocative. A commitment to managing the franchisee, while showing leadership and focus on building the brand with them is necessary for franchising success.
The business must be operating a business system which it has tested at different market locations and proven. The business must have navigated the learning curve of mastering its products and services; its industry unique demands and the business environment which include the customers, suppliers, staff, host locality etc. The nightmare of the franchisor is to recruit a franchisee whilst still operating an unproven business system.
The capacity to provide support should be available. Support is determined by the structure operated, which ensures there are enough hands and experience to attend to the demands of the franchisee; it is also determined by availability of sufficient revenue base to provide needed support to the franchisees.
The intending franchisor should have long been getting request for franchise opportunities from potential franchisees, long before it is actually ready to franchise. Hence there should be evidence of demands from willing franchise buyers with the financial capability to become franchisees.
Franchise buyers are constantly on the lookout for brands that have attained some level of popularity. They desire a brand with a quality image they can invest in with a sense of pride. The corporate image of a business through its branding and promotional materials, signage, look and feel etc., should exude quality and professionalism which are saleable. Of course, most people that would patronize a franchisee outlet would buy a known brand over other factors that influence buying decisions.