How to franchise a business
Before you look at how to franchise your business, you need to consider if you business is franchiseable.
Franchising should not be as seen as a testing ground for new or unproven business ideas but as a means of expanding an already successful business. You need to therefore have an existing business that is trading successfully before you consider franchising your business.
You also need to look at whether your business is franchiseable as not all businesses are. Over time most business concepts can be turned into franchiseable entities. A business with franchise potential will have:
Credibility – have a good track record and experienced management team. It should be registered and capable of being expanded into different areas in Australia and possible other countries. The company should have had some sort of local public acclaim
Profitability – the business needs to have a proven record of success and generate adequate gross margins to allow franchisees to make money after they have paid their franchise fees.
Uniqueness – the business should have a unique selling point that allows it stand out from the competition. This competitive advantage should be sustainable and able to allow the business to compete in national and even international markets.
Demand – the business needs to be in demand wherever it is located. If it does well because it is in a prime shopping centre or on a busy high street in a big city, then you need to look at would it be as successful in a less known location or in a small town. The product needs to have staying power and not be a fad.
A developed set of skills - the business needs to have a set of systems, procedures, expertise, skills and know-how that optimises every operational step. This is what would form the operations and procedures manual.
Transfer of skills – you must be able to train franchisees lacking experience in the sector to operate the franchise business within a reasonable period. They cannot start operating without having the lack of skills, and it would be impractical for them to be in training for too long.
Affordable – the franchise must be affordable to your target audience.
Read more on franchising a business