Recently Peter Thompson appeared for the second time on BiZ TV discussing :
Is your business ready to franchise? It could be, and our franchising guru Peter Thompson will give you the 5 fundamentals in order to ensure that your business is ready to take the leap.
Click here and watch the video
There are several things that must be considered before one franchises their business. According to our franchising guru Peter Thompson, if you can’t reproduce your business you are going to have to rethink your plan.
In this scenario, an example of a “no-go situation” is the case of a new entrepreneur who has a great idea, which he or she thinks is a sure bet for a franchise. However, the entrepreneur cannot wait to find franchisees to prove him or her right…or wrong. You cannot launch an unproven business by asking a franchisee to do what you are either unwilling or financially incapable of doing yourself. After all, the prospective franchisee is going down the franchise route because they are looking for a total support package (see above). Most franchise consultants in Canada are approached by entrepreneurs and business owners on a regular basis to help them launch a business idea using capital from franchisees. Franchising is not about using other people’s money to try out something new. If you have little or no capital to start your business, there are alternative methods and financial resources in the market to help you. As a general rule, before considering franchising as an expansion strategy, your business should be operational for at least three years with a second unit opened and established operating systems in place providing similar or even greater success than the first one. The business must be profitable, with positive cash flow and with sustainable operating systems in place.
Of equal importance, it should be capable of being wholly reproduced.
Another example of a “no-go situation” is a concept which depends solely on its founder (e.g. a creative chef, a unique knowledge-based service, etc.) where the recipe for success cannot be reproduced in documented procedures or through a training program. This does not mean that other stores cannot be opened with success, but if it requires day-to-day supervision by the founder, you need to ask, “What is the value of a franchisee for this concept?”