Is Your Business Franchiseable?

The Bfa:

The franchise method is now used successfully by all sorts of businesses in all sorts of markets; but not all businesses are franchisable. If your business has one or more of the following characteristics, franchising may not be suitable:

* A product or service which is only likely to have a market for a short time (e.g., toy hoola hoops)
* Gross margins which are too low to offer a return on investment to both you as the franchisor, and your franchisees (e.g. newspaper delivery)
* Skill levels for each operating unit that require very long training periods (e.g., management consultancy)
* Predominantly repeat business customers whose loyalty relates to the individual providing the service and which would be difficult to transfer to a brand (e.g. marriage counselling)
* A geographically defined market that doesn’t have the potential to be repeated in many places (e.g. Tower of London)
* A business with audit and control requirements which are too critical to involve franchisees operating as separate legal entities (e.g., a bank)
* A business which is failing.

If you think your business might be franchisable then you will need to offer franchisees a business format which includes your brand, business system, and support services under the contractual terms of a franchise agreement which will, amongst many other things, set out the financial arrangement. Considerable development work is required before you will be in a position to draw up offer documents and begin recruiting franchisees.

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