The franchise industry, although a relatively new concept in India, is making a significant mark in the market. For many business owners, franchising might seem the ideal plan for expansion. After all, franchisees are self-motivated, since it is their money that goes in as investment.
But not all businesses are cut out for franchise.
Franchising a business that is not fully ready for this big step can result in unfavorable consequences. So if you’re considering franchising, the most important question to ask yourself is, “Am I ready?” To achieve growth and long-term success, you need to have a great franchise concept and execution.
So how do you know your business is franchisable, and whether it can fulfill your goals and aspirations? How can you ensure that your business model can be replicated by someone else?
To answer these questions, you need to assess your business in detail. In this guide, we’ll walk you through some franchisability factors that will help you determine whether your business is franchisable or not.
1. Is Your Business Successful?
One of the most important factors for franchising is success. No one wants to invest in a business that hasn’t proven itself. So it is of utmost importance that your brand is successful and has a track record of positive results and reputation.
2. Does Your Brand Have Credibility?
To sell franchises, a company must be credible in the eyes of prospective franchisees. The credibility of a brand is easily reflected in its history, popularity, number of outlets and consistency of quality, to name a few.
3. What Makes Your Business Unique?
s there a unique factor to your business that sets you apart from other competitors? This factor can come in different forms like services, products, location and so on. At the end of the day, the feature that makes your business special can be used as an advantage over competing brands.
4. Is Your Business Transferable?
To ensure consistency in services, you must have a proper working model that can be taught to your franchisee partner. Complex or personal business models are difficult to replicate, so it is important that you have a proper system that is easy to learn and implement.
5. Is Your Brand Protectable?
As a franchisor, the most important asset you will be licensing over to your franchisees is your brand. Hence, it is important that you own and control your business. One way to do that is trademarking your brand name to ensure that your business is protected and secure.
6. Is Your Brand Profitable?
This is the most important test for franchisability. Can you ensure your potential franchisees a profitable return on their investments? It is important that the franchisees make a meaningful profit after paying your royalties and other dues.
7. Can Your Business Adapt Well To Other Markets?
When planning to franchise, it is important to consider the limitations of your business.. Let’s say your brand is very popular and profitable in a suburban area, but would it do the same in a metropolitan area? Studying the needs of different markets and target consumers can help you determine where to franchise and how to overcome geographical barriers.
8. Do You Have The Right Franchise Budget?
While franchising is a low-cost option, it’s certainly not no-cost. Before franchising your business, you need to understand what your franchising goals are and the right budget necessary to get to your goals. You must have enough capital to cover the legal documentation, and other expenses you might incur, as well as make an offer that will be affordable to the franchisee.
9. Are You Committed to Building a Franchise System?
A franchise system is created when a franchisor and franchisee comes together at the best interest of a franchise. The most successful franchises are not those with the most unique idea or diverse products; they are the ones with the best execution and a strong franchise system. Strong franchisee relationships will help you sell franchises more effectively, and when needed, introduce changes to the system more easily. Additionally, a strong system will motivate franchisees to sustain the quality of products and services.
10. Is Your Brand Affordable?
It is important that the franchise fee is not overly-expensive as it would limit the number of franchisees buying into your network. The franchise fee and royalties must be reasonable and affordable to you as well as the franchisee.
To determine what is right for the growth of your business, it is important to evaluate these franchisability factors. Having an open discussion with your franchise consultant can help you map out the best way to achieve your franchise growth goals. With the right plan, execution and trusted consultants, the benefits of franchising your business can be spectacular.
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