Is my business franchisable?
The franchise method is used successfully by many different types of businesses in all types of markets. However, it is important to understand that not all businesses are franchisable.
If your business has one or more of these characteristics, franchising may not be suitable:
A product or service which is likely to have a market for a short time only – e.g. the yo-yo or hoola hoop
Gross margins that are too low to offer a return on investment to you as the franchisor and your franchisees – e.g. newspaper delivery
Skill levels for each operating unit that require extensive training periods
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 and considerable development work will be required before you are able to draw up offer documents and start to recruit and train franchisees.
The business format will include:
The contractual terms of a franchise agreement which will set out the financial and other arrangements