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Should You Franchise Your Business 20 Questions

Written by: Steve Vandegrift

Article Overview: There are a number of variables that a business must 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.

Should You Franchise Your Business 20 Questions

There are a number of variables that a business must 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 business operate following prescribed processes and procedures (either written or oral)?
2. Can others be trained to duplicate the business system?
3. Is there more than one location currently in operation?
4. Is the industry projected to grow?
5. Will the current business operation serve as the prototype for the franchise model?
6. Have existing staff members been identified who will provide franchise training and ongoing support to Franchisees?
7. Is the business profitable?
8. Are the profit margins sufficient to permit a percentage of gross sales to be paid by the Franchisee to the company in the form of royalties and still provide a fair profit to the franchisee?
9. Is the business unique within its industry?
10. Has the "ideal" Franchisee been identified?
11. Have individuals/investors expressed interest in opening a “franchise” of the business?
12. Are there economies of scale related to purchasing, advertising or administrative functions that will increase as additional locations are added?
13. Will the projected initial investment relative to purchasing and starting the franchise (i.e. franchise fee, equipment, supplies, materials, etc.) permit the Franchisee to earn a fairly rapid ROI?
14. Are there proprietary aspects of the Franchise Business?
15. Is the business a new concept?
16. Have “sources of supply” for equipment, products and supplies been established?
17. Will the company provide a proven sales and/or marketing program to Franchisees?
18. Will the company provide assistance in securing customers for the Franchisee?
19. Can “exclusive franchise territories” be established?
20. Does the company have a good reputation among consumers and suppliers?

Although few companies can answer "yes" to every question, the number of positive responses is a good indicator of your company's franchise potential. An experienced franchise consultant can assist you in fully determining whether franchising your business is appropriate.


© 2009 Stephen Vandegrift, all rights reserved

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Article Tags: administrative functions, business operation, business system, economies of scale, franchise business, franchise development, franchise fee, franchise territories, franchisee, franchisees, gross sales, initial investment, marketing program, ongoing support, profit margins, proven sales, royalties, staff members, system 3, viability



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Fed rate cuts . . . - So just what do the newest Fed rate cuts mean to Franchise and Business Opportunity investing? Is it immediately felt? What timeframe do you think, or rather, where are we in terms of new vs. existing business investment? A similar question can be composed for the economic stimulus checks - will they a have any effect if consumers spend a little $$
Re: Hello EvanCarmichaelers, and Thanks! - "Carmichaelers" ..nice.. Over at the Young Entrepreneurs I'm going to start calling my readers "DSilvelers" - I like the sound of that! Welcome on board theFranchiseMarket. Do you run a Franchise Business or are involved in Franchising in anyway?


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