The following criteria provides a general starting point in evaluating the franchisability of a business. While there are many variables and factors to truly assess a business’ viability, these points should help in the assessment. It is recommended that for a more precise analysis that a consultation be conducted by a seasoned franchise consultant to fully determine franchisability.
- The business is currently in
operation and has had time to have proven its commercial prowess. This means that the business should have been in operation for at least three years.
- The business must have a national adaptability. This means that the business should have a stable and reliable market both locally and nationally.
- The business has to be profitable. A profitable business plays a major role in allowing both the franchisors and the franchisee to earn a decent and reasonable salary at all times. Essentially a franchisee should be able to generate a 20% return on their cash investment, plus earn a manager’s sales if they are the owner/operator.
- The business should have something unique or special that makes it stand out from the rest. It has to offer faster, better, juicier, affordable, or more reliable products and services to clients in its own unique way.
- Availability of funds or finances – The more a franchisee can get the required financial support, the more a business can be franchised. Furnishings, buildings, receivables, and fixtures are all easy to finance and make it easier for businesses or companies to create leverage.
- The business concept must be teachable to franchisees within a reasonably short period of time. Franchisees must be given proper and comprehensive training and coaching before getting into the franchising business.
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