Taking into account the various factors that contribute to the success of a franchise program, we have identified eight keys to franchisability, against which you can measure your business:
- Size and longevity. Has your business been in operation long enough to project its future success? Is it large enough to provide a level of earnings that would make it an attractive investment?
- Profitability. Is it making money? Consistently? Predictably?
- Teachability. Can other people be taught to run your business in the same way that you do, the way that has made it successful?
- Systematization. Can all of the daily operations of your business be analyzed and fully described in an operations manual that another individual could follow to produce the same results you achieve? Can every task be replicated?
- Marketability. Can your business concept be effectively communicated and sold to others?
- Transferability. Can your business work just as well in another part of the country or in different market situations?
- Originality. Do you have a point of difference from your competitors? If you’re just saying, “Buy my product because I’d rather get rich than have them get rich,” you are not going to be successful—in business or in franchise. Will something distinctive about your business result in consumers buying your product or service? A “hot and juicy” hamburger, for instance, or a winning marketing concept. Coastal Fitness Center, a chain of health and fitness centers for women, conducts a membership blitz before each new unit opens, thus providing the unit with start-up revenue before day-to-day expenses are incurred.
- Affordability. A business that is profitable for you might not be profitable for the franchisee. Does enough profit remain, after a franchisee has paid the initial investment in your franchise fee, the costs of getting into business, and an ongoing royalty? Will they need significant financing? Can you help them obtain it?