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An analysis and evaluation of your business to determine if it's an acceptable franchising business model, should include:
Proven Concept - Do you have an operating prototype that has proven market acceptability and is profitable? Are the operating margins sufficient to provide an above average ROI after the franchisee makes royalty payments?
Is Your Business Unique? - In a highly competitive marketplace, the franchise must stand apart from its competitors to attract potential franchisees. The "unique" market niche can be design (facility and product), delivery systems, business format, and marketing/advertising approach.
Is the Business easily "Trainable" and Understood - Keep in mind that most franchisee's buy franchises in an industry that they are not familiar with. The business must be easily understood (trainable) and duplicated in a relatively short period of time for it to be successful. If the business model is to complex you will severely limit your ability to attract qualified franchise applicants.
Protected Trademarks - The Franchisor must have a valid trademark that will provide the identity that the franchise business will be conducted under. It is the Franchisor's obligation to control and protect the trademark and service marks.
Franchisor Expansion Capital - Expansion capital is needed to provide the required Franchisor services to its Franchisee's including; development and modifications to the business model (format); Franchisee start-up training; franchise marketing and advertising; legal and consulting fees; corporate and field support personnel. Although the Franchisor will receive initial franchise fees from franchisee's that will substantially offset its operating cost, the Franchisor should not be totally reliant on this for its operating income. Without adequate operating capital, the pressure to sell franchises to survive will greatly affect the Franchisor's ability to select the best and most qualified franchise candidates to expand the business.
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