Posted by Elizabeth Gore-Jones
on 12 February 2015
This is a list of some considerations in determining if your business can be franchised:
1. How old is the business?
A rule of thumb is that the business should be operating for at least 3 years before it is franchised.
Whilst this is not set in stone, it does allow for the business owner to:
(a) determine if the business is a success;
(b) determine if the business earns sufficient money;
(c) make alot of mistakes in operating the business and find solutions for those mistakes(which they can then pass on to their franchisees);
(d) fine tune the operation of the business;
(e) systemetise the busines.
2. Is the business a fad?
The potential franchisor needs to ensure (as far as possible) that the business will be relevant in the future.
A fad business is going to lead to big issues for the franchisor and franchisees if the business is not viable.
Perhaps a lesson in not listening to your lawyers about the potential longevity of a business comes from an old lawyer who once told the story about cautioning their soon to be franchisor client that this coffee craze is probably just a fad, they then grew to be one of Australia's largest coffee shops.
3. Can the business be systemetised?
It is not essential that a business can be systemetised in order for it to be a successful franchise, but it helps.
Many potential franchisees want to be sold a "system" with an operations manual outlining what they do when they get up in the morning right through to going to bed again at night.
4. Does the business earn enough money?
Remember that the business will need to support the franchisee and represent a reasonable return on investment as well as earning enough for the franchisor to make the whole franchise venture worthwhile.
5. Change of role
The franchisor's role may change very quickly from a business operator to a people manager.
Conclusion
This is obviously not an exhaustive list of the matters to take into account in deciding to franchise your business but it is a starting point.
