Business Mentor: What makes a business franchisable?

Armando Bartolome

Posted at May 07 2022 08:18 AM

I often get asked in various fora, both virtual and face to face, how to know if their business is franchisable. Some business owners wonder why people ask them if they are franchising their business.

Many companies have franchised, and these franchises are doing well. Brands that used to be unknown sometimes even pop up overseas.

So what makes a business franchisable?

The first thing that comes to mind when we talk about franchising is brand recognition. Branding is one of the most critical factors in a company’s success and it is also one of the best ways to ensure that a business becomes a franchise. If a brand image is good, it will attract customers.

But before building the brand, an entrepreneur must identify the target market, product acceptance, and location. The company must also show a profit.

Branding does not mean just having a logo and a name. It means building up a strong reputation over time through word-of-mouth publicity, advertising, product promotion, etc.

Another factor that makes a business franchisable is delivering quality products and services at affordable prices. People like to buy cheap things, and this is especially true with consumer goods. There is an Operations Manual with clear procedures for everyone to follow. There may be several revisions as time goes by. 

Franchising includes a document called Franchise Agreement. This agreement should cover all aspects of the relationship between the parties. 

It should consist of the following:

1) The rights and responsibilities of the franchisor and the franchisee.
2) The terms of payment
3) The duration of the contract
4) The territory where the franchise operates
5) What happens if either party terminates the agreement?
6) How long does each party remain responsible for paying taxes?
7) Who owns the intellectual property associated with the trademark?
8) Does the franchisee pay royalties?
9) Is there a minimum purchase requirement?
10) What are the rules governing the use of the trademark?
11) What are the rules regarding the transfer of ownership?

The agreement is exhaustive and covers all phases of the business relations. Both franchisor and franchisee must have time before signing to explain every aspect of the contract and address all expectations.

Granting a franchise to interested parties has protocols. It is not enough for a person to get interested, there shoud also be commitment to managing the business. On the other hand, the franchisor should go for quality franchisees, not numbers.

A franchisee should undergo a thorough screening process. The applicant should be able to demonstrate the ability to manage a franchise. In addition, a prospective franchisee should be willing to commit to the required training and support. The franchisor should provide adequate resources to help the franchisee succeed in the business.

Franchisees should be committed to the success of the franchise system. They should understand the commitment and responsibility involved in owning a franchise.

Franchisees should be aware of the risk of starting a new business venture. They should realize that they will need to invest money and time into the business.

Moreover, the franchisor should provide continuous support such as training on product quality, consistency of service, and making the branch seamless with the rest.

Getting a business into a franchise takes time and effort on the part of the entrepreneur. It is adding a new dimension. Entrepreneurs whowant to explore expansion via franchising may need to weigh things and consult professionals. 

Finally, my advice to the entrepreneurs is to never let an opportunity pass. Imagine if the owners of the big brands today did not mine the world of franchising. They would not have accomplished their dreams.

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For more information, you may contact Armando "Butz" Bartolome 
by email: business.mentor@butzbartolome.com
FB Page: Butz Bartolome
website: https://www.butzbartolome.com 

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