Recently Peter Thompson appeared 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.
Much has been written about how franchising, especially in North America, is the low-cost, business development strategy which is guaranteed to be successful.
While it is true that there are many brands that have embraced this strategy with enormous success, there are equal numbers who have tried and failed due to a combination of some of the areas that I will discuss during this presentation
Let’s start by asking why business owners should consider franchising their business in the first place.
There are three principal reasons, and all other reasons are typically variations of the following:
- Using franchising as financial leverage to grow a business faster than one could with only one’s own capital
- Expand in unfamiliar areas using the local knowledge of franchisees
- The belief that franchise owners (franchisees) will have more significant impact on the sales, customer satisfaction and the bottom line than paid employees.
Can any business be franchised? Well, let’s take a look.
As a rule, a business can be considered “franchisable” if it meets five basic criteria:
1- It can be reproduced
2 – It is profitable
3 – There is an added-value to the potential franchisee
4 – There are the financial resources to support a franchise system
5 – That you are the right fit as a Franchisor?
It is important to understand that, in most cases, potential franchisees are not entrepreneurs themselves. Typically, they are either employees of other businesses wishing to improve their current situation or have recently left full time employment with a financial package and are not yet ready to embrace retirement. The commonality with both groups is that they want to own their own business but perhaps realize they do not have the required business skills or industry experience. They therefore look to take advantage of a business system which will provide them with all of the key benefits of Franchising:
1 – An established brand and proven business model
2 – Mass purchasing power
3 – Co-operative Advertising
4 – Operational Support and Training
5 – R&D, marketing new products and services
6 – Access to financing and site selection, where applicable.