There are a number of variables that a business must consider before embarking on a franchise development program. As a first step in determining the viability of franchising your business, the questions listed below should be carefully considered. Although there are other factors that enter into the decision to franchise a business, the number of positive responses to these questions is a good indicator of your company’s franchise potential.
Þ Does the business operate following a prescribed system of processes and procedures (either written or verbal)?
Þ Can others be trained to duplicate the business system?
Þ Is there more than one location currently in operation?
Þ Has the business been operating for more than five years?
Þ Is the business profitable?
Þ Are the profit margins sufficient to permit a percentage of monthly gross sales to be paid by the franchisee to the company in the form of royalties and still provide a fair profit to the franchisee?
Þ Are there proprietary systems, products, or services used in the operation of the business?
Þ Does the business have a good reputation among consumers and suppliers?
Þ Is the business a new concept or unique within its industry?
Þ Have individuals/investors expressed interest in opening additional locations for the company?
Þ Are there economies of scale related to purchasing, advertising or administrative functions that will increase as additional locations are added?
If you answered "yes" to a majority of these questions, you should consider the benefits of franchising your business