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Should You Franchise Your Business?

Written by: Mary Tomzack

Article Overview: Practical advice for all with "Should you franchise your business?"

Should You Franchise Your Business?

You've got a thriving business and customers are lined up around the block. Your friends say that you should strike while the iron is hot and start franchising. Even your spouse is whispering in your ear, "you could be the next Ray Kroc." Looking at the industry, it seems just about any kind of business can be franchised, so why not? It may well be that your business is ripe for expansion, but it may or may not meet the criteria for a successful franchise. Here are some basic guidelines to determine if your business is a good candidate for franchising:

Is your concept proven? People buy franchises so they don't have to go through the trial-and-error themselves. Your track record should include strong and steady sales growth, experienced management, good press, and growing brand awareness.

Is your concept unique? Your business needs to be clearly different from other players in your industry. Take a look at your competitive advantage. Is it sustainable?

Can your concept be duplicated? Your system(s) must be teachable with a short learning curve - three months or less is optimal. Operating procedures need to be documented along with a checklist for quality control and training procedures.

Will your franchisees see a good return on their investment? Your franchise units should be able to generate a 15 to 20 percent return on investment after deducting the royalty.

Do you have the time to start franchising? Make no mistake, this is not the easy road to expansion. You'll work longer and harder than you ever have before and it will be at least 2-3 years before it eases up at all.

Do you have the money to franchise? A big reason why businesses franchise is because it's more economically feasible than starting a chain. But that doesn't mean it's cheap. Capital resources for a new franchise typically run into hundreds of thousands of dollars.

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Article Tags: 3 years, brand awareness, capital resources, competitive advantage, franchise units, franchisees, franchises, hundreds of thousands, learning curve, mistake, money, quality control, ray kroc, return on investment, royalty, thousands of dollars, three months, thriving business, trial and error



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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