Can Your Business Expand By Franchising?
Franchising has proven to be one of the most effective ways for small businesses to expand. It also has a great track record and the outlook for future franchising is bright. With more than 3,500 different franchised concepts in operation around the world, there isn’t a business sector that hasn't seen a franchise system.
With future growth and past successes in the industry, it is no wonder that business people and entrepreneurs should wonder if their business concepts are suited to expanding by franchising.
- Can the business idea/concept satisfy consumers requirements?
The public’s demand for new services or goods is forever changing and it’s up to companies to seek and identify consumer needs and wants and try to find ways of fulfilling those requirements. The main aim is to give you the public something they want or need to turn them into consumers.
- Can the business idea/concept be replicated?
Franchising is all about replicating and can your business do that. Can your concept be replicated across the market with different types of owners? This is important and can be explained here. A burger bar is easier to copy than a fishing boat business, as not everyone has the skills nor the facilities or location to replicate the latter.
- Is the their really potential for the franchisee to run a profitable business?
In exchange for the franchisee using the branding and following the proven franchise system, the franchisee pay the franchisor a pre-determined licence fee and continue to pay management service fees. Though for franchisees to succeed long into the future, they must be able to, after paying the fees, make a profit.
- Does the concept for the franchisor make it profitable?
A franchise system will have the most chance of success in the long-term if fees and expenses are set out in a way that allows both the franchisor and franchisees to operate profitably. As the franchise develops further, the franchisor may try and find additional revenues from the sale of products, equipment and services to their franchisees.
- Is there enough ‘Scope’ to keep the franchisee within the franchisors system?
When the Franchise Agreement has been signed between the two parties, there is a legal contract binding them together; it can be up to and longer than 20 years. However, there has to be more than just the legal contract that keeps a successful franchisee in the system. Other benefits have to be on offer for the franchisee - ongoing training and support, access to a network of suppliers and, not forgetting, innovation in your product or services that keep consumers/clients interested in your brand – and continued success to the franchisor.