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The 12 Criteria of Franchisability #1

September 3, 2018


Uncategorized frankdoctor Comments Off on The 12 Criteria of Franchisability #1

While it is initially impossible to determine the franchisability of a business concept without a significant amount of analysis, there are pointers that give a good indication of the feasibility of a company for franchising and the likelihood that it will achieve success as a franchisor.

In this Blog we will outline 5 items and then follow this with other sets of items in the following blogs

  1. Credibility – Credibility can be reflected in a number of ways: organization size, number of units, years in operation, look and brand of the business unit, publicity, consumer awareness of the brand, and strength of management, to name the most prominent. To sell franchises, a company must first be credible in the eyes of its prospective franchisees.
  2. Transferability of Knowledge – The next criteria of franchisability is the ability to teach a system to others. Generally speaking, if a business is so complex that it cannot be taught to a franchisee in three months, a company will have difficulty franchising. To franchise, a business must generally be able to thoroughly educate a prospective franchisee in a relatively short period of time.  Some more complex franchisors offset this handicap by targeting only franchise prospects that are already “educated”; in their field (e.g., a medical franchise targeting only doctors).
  3. Refined and Operations and Procedures – A refined system of operations and procedures is necessary to demonstrate that the system is proven, and is generally instrumental in the training of franchisees. The operations and procedures also act as a testing ground for new products, new services, marketing techniques, merchandising, and operational efficiencies.
  4. Affordability – This criteria is as much a reflection of the prospective franchisee as it is of the actual cost of opening a franchise. Affordability merely reflects a prospective franchisee’s ability to pay for the franchise in question. . For example, a multi-million dollar hotel franchise is affordable to real estate developers, whereas a franchise with a $50,000 start-up cost that targets prospects with clerical experience might not be.
  5. Market Trends and Conditions – While not an indicator of franchisability as much as a general indicator of the success of any business, these trends are key to long-term planning. Is the market growing or consolidating? How will that affect your business in the future? What impact will the Internet have? Will the franchisee’s products and services remain relevant in the years ahead? What are other franchised and non-franchised competitors doing? And how will the competitive environment affect your franchisee’s likelihood of long-term success.

There are 7 other items that FrankDocs uses to assess the Franchisability of a business. We will cover these in more detail in later blogs.

FrankDocs is the premium suppler of Franchise Documents, Legal Documents, Franchise Manuals, Franchise Templates and Franchisee Recruitment Documentation in the UK. Feel free to visit us at www.frankdocs.co.uk or by emailing support@frankdocs.co.uk

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