What Makes a Business Franchisable?

I often get the audience’s questions in various fora (virtual or face-to-face) on how to know if their business is franchisable? On the other hand, others wonder why there are growing queries from people if they are franchising the business. People inquire upon seeing an existing business as carrying potential growth. The answer lies in the fact that many companies have franchised, and these franchises are doing well.  Brands that used to be unknown began to pop in locations locally and even overseas.

Allow me to give you an idea as to what makes a business franchisable and if your business can be franchised or not.

What Makes A Business Franchisable?

The first thing that comes to mind when we talk about franchising is the concept of brand recognition. Branding is one of the most critical factors which make a company successful, and it is also one of the best ways to ensure that a business becomes a franchise. If a person has a good brand image, he will surely attract customers.

The second point is before building the brand, the entrepreneur undergoes trial and error. Why so? Primarily the business must identify the correct parameters like location, target market, and product acceptance. More so, the whole company must show a profit.

It is important to note that branding does not mean just having a logo and a name. It means building up a strong reputation over time through word-of-mouth publicity, advertising, product promotion, etc.

.Another factor that makes a business franchisable is delivering quality products and services at affordable prices. People like to buy cheap things, and this is especially true with consumer goods. There is an Operations Manual with clear procedures for everyone to follow. There may be several revisions as time goes by.

Franchising includes a document called Franchise Agreement. This agreement should cover all aspects of the relationship between the parties. It should consist of the following:

1) The rights and responsibilities of the franchisor and the franchisee.

2) The terms of payment

3) The duration of the contract

4) The territory where the franchise operates

5) What happens if either party terminates the agreement?

6) How long does each party remain responsible for paying taxes?

7) Who owns the intellectual property associated with the trademark?

8) Does the franchisee pay royalties?

9) Is there a minimum purchase requirement?

10) What are the rules governing the use of the trademark?

11) What are the rules regarding the transfer of ownership?

The agreement is exhaustive to cover all phases of the business relations. Both franchisor and franchisee must have time before signing to explain every aspect of the contract and address all expectations.

Granting a franchise to interested parties has protocols. It is not enough for a person to get interested but more on committing and managing the business. On the other hand, the franchisor is not after having a staggering growing number of branches. Rather more on quality and qualified franchisees.

A franchisee who wants to become a franchisee should undergo a thorough screening process. The applicant should be able to demonstrate the ability to manage a franchise. In addition, a prospective franchisee should be willing to commit to the required training and support. The franchisor should provide adequate resources to help the franchisee succeed in the business.

Franchisees should be committed to the success of the franchise system. They should understand the commitment and responsibility involved in owning a franchise.

Franchisees should be aware of the risk of starting a new business venture. They should realize that they will need to invest money and time into the business.

Moreover, the franchisor’s role in providing continuous support such as training on product quality, consistency of service, and making the branch seamless with the rest.

Getting a business into a franchise takes time and effort on the part of the entrepreneur. It is adding a new dimension. Entrepreneurs who have the lingering question of exploring expansion via franchising may need to weigh things and consult professionals.

Finally, my advice to the entrepreneurs is to never let an opportunity pass right under their eyes. Imagine if the owners of the big brands today did not mine the world of franchising. They would not be anywhere in their dreams.

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You may contact Armando “Butz” Bartolome for questions and more information.

By email: aob@gmb.ph

FB Page: Armando Bartolome

Linkedin: https://www.linkedin.com/in/franguru/ 

Website: https://www.gmb.ph