Are My Sales Strong Enough to Franchise?
The sales criteria needed to determine whether your business has what it takes to franchise is dependent upon many variables. The gross sales of businesses in some instances are not always the determining factor of profitability. For instance, restaurants may see high level of sales but their profit margins are typically low. In other businesses that have lower start up costs such as home based businesses, or distribution franchises, the overhead is minimal and gross sales may not be at a level of larger establishments but the margins are much stronger. The standard measure applied to determine franchisability is that a franchisee, by the second year, needs to have a 15 percent return on their cash investment plus a manager’s salary. If this measurement does not seem feasible for your business, one must reset their sales goals and gear up their marketing initiatives in order to pursue franchising. Sales in every industry can vary dramatically. If properly disclosed, a strong sales figure can be a positioning tool in the franchise marketplace. The type of industry, the market and the concept all need to be taken into consideration when it comes to evaluating gross sales. As a business owner, one detail to remember, whether you sales are $100,000 a year or $1,000,000 a year, it takes just one individual to see the potential of your business and invest in your franchise.
Sales critera is one of the many topics of Francorp’s online “How to Franchise Your Business” seminar that is available FREE when you mention this newsletter ($195 value). To learn more about franchising, visit http://www.francorp.com or call 800-372-6244. As a reader of this newsletter, to sign up for your FREE seminar ($195 value) or take the FREE franchise quiz, click the buttons on the left for direct access.