How Franchiseable Is A Business

An appropriate initial step in the choice to franchise is an examination of the question of whether or not a business concept is franchisable. Any organization badly considering franchising must undertake this analysis before executing a franchise strategy. While it's impossible to ascertain franchiseability of a business concept with no substantial quantity of investigation franchise experts are guided by the following criteria to evaluate the readiness of a business for franchising and the likelihood that it'll have success as a franchisor.

1. Credibility: To sell businesses, a corporation must first be reliable in the eyes of its potential franchisees. Large organization size, number of sockets, years in performance, strength of management will be key credibility factors.

2. Differentiation: Additionally to authenticity, a franchise organization Should be properly differentiated from its franchised competitors. This may come in the shape of a service or product, a reduced investment cost, a marketing plan, or target markets.

3. Transferability of knowledge: The following criterion is the capability to teach a system to others. To the franchise, a business must typically be in a position to completely educate a franchisee in a short period of time.

4. Adaptability: Then, measure how well a concept can be adapted from one marketplace to the following. Some concepts don't adapt well over large areas due to Regional variations of consumer preferences.

5. Successful and refined prototype operations: A prototype is essential To prove that the system is known, and is instrumental in the training of franchisees. The prototype also acts as a testing ground for merchandising, new services, marketing methods, new products, and operational efficiencies.

6. Documented systems: All successful companies have systems. However, so as To be franchised, these systems must be documented in a way that conveys them efficiently to franchisees.

7. Affordability: Affordability reflects a franchisee's capability to cover the franchise in question. This criterion is as much a manifestation of the potential franchisee as it's of the true opposed to opening a franchise.

8. Return on Investment: This is a true acid test. A business must, naturally, be profitable. But more than a franchised business needs to allow enough gain following a royalty for the franchisees to make a decent return on their investment of time and money.

9. Industry trends and conditions: While perhaps not an indicator of franchisability as far as overall indications of the success of any business, these tendencies Are essential to long term planning. Is the market growing or consolidating? . How will that affect your company in the future? . What impact will the Internet have? . Will the franchisee's services and products Remains relevant in the years ahead? . What're other franchised and non franchised competitors doing? . And just how will the aggressive environment affect your franchisee's likelihood of long term success.

10. Capital: While marketing is a very cost effective way of expanding a business, it isn't a cost way of expansion.