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As a prospective franchisor, you will need to satisfy yourself that your business or idea has all the elements that could turn it into a successful franchise. There are a lot of questions that need answering.

Is it a business in which the know-how can be quickly and easily passed on to franchisees? Would you be capable of training them? Are there sufficient profit margins in the business for both you and your franchisees to make profits that are commensurate with the time and money the two parties would need to invest?

Would the business prove to be sufficiently attractive to franchises in the competitive franchise marketplace? Are your financial and management resources strong enough to develop your franchise package,set up an arm’s length pilot unit to prove the concept,recruit and train franchisees, and then help them start-up their businesses and develop them?

Advantages

The primary advantage is that franchising enables you to build up a nationwide network of branches using other people’s money (the franchisees). It is their capital that pays for the branches.

The secondary advantage is that as the franchisee has put his own money into the business and in all probability borrowed heavily to set it up that he will be self-motivating and run the business more effectively than an employed manager. This means that you don’t need conventional layers of supervisory management and you save on management costs.

Franchising also offers the opportunity to grow globally as its advantages apply internationally as well as nationally.

Disadvantages

Your franchisees own your branches and your income from their royalties will be less than you would get in operating profits if you owned them. You are putting the reputation of your business and your brand in the hands of your franchisees and you will need to police your network carefully to ensure they are running their businesses in accordance with your standards.

You will also need to have systems and checks in place to ensure your franchisees are not underdeclaring turnover and that you are consequently losing royalties. You will have to rely on your growth on your ability to attract franchisees and if you are not successful it can let in competitors.

Your growth can also be stunted by franchisees who reach their comfort zone and are not prepared to invest their time and money in developing their unit. You might also face damaging collective action by your franchisees if they feel they have grievances.

If you would like assistance in turning your business into a franchise by a BFA accredited franchise consultant, please complete and send the form below (please complete all fields).

How to Franchise Your Business
By Martin Mendelsohn

If you are considering franchising your business, or have an idea that you believe would make a successful franchise, this guide will explain the steps you need to take. Mistakes can be costly, both financially and morally. Businesses, which were profitable, have been ruined by going into franchising without adequate preparation. Failure causes great personal distress not only to franchisees, but to the franchisors, who may have persuaded them to mortgage their homes and sacrifice their life-savings to join the franchise. Such disasters can be avoided by taking the right advice. The first step is to read this guide. Sponsored by Howarth Franchising.

UK £14.95, airmail £16.45. Order

The Franchisor's Handbook
By John Pratt

John Pratt takes franchisors firmly by the hand to guide them through all the practicalities of launching and developing a franchise system that conforms to best practice. On aspects where opinions may differ, he offers his definitive solution because, as he rightly says, simply giving alternatives is "the least helpful to busy franchisors who need firm guidance on how to proceed." It is this straight forward and unambiguous advice that makes his book so valuable to aspiring and existing franchisors.

UK £18.50, airmail £24. Order

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