It’s every entrepreneur’s dream: from its humble beginnings, their business expands into a multi-location chain of stores, carrying the brand built by years of patience and hard work. As such, a business franchise is widely accepted as the mark of a successful entrepreneurial effort that allows others the opportunity to experience the same.
Not all businesses are built for franchising, however, and any ill-equipped attempt can lead to financial ruin. Assessing a business’ franchising potential with help from professional franchise consultants lets owners understand the intricacies of the process, as well as measure their chance for success more accurately. Here are several qualities business owners could use to gauge their business’ potential to become a lucrative franchise.
Profitable and Replicable
The level of profitability, which is the primary trait of any great business, is crucial to attracting franchisees — more so if it can pay off loans before the first term of the agreement’s end. A franchise’s return on investment also informs a prospective franchisee of the business’ return rate compared to other types of investments.
A replicable business means its processes should be easily adaptable in any location, as well as require the minimal cost to set up operations and train staff. This includes the style, theme, and atmosphere to retain consistency and familiarity among multiple franchises.
A Clear Brand Identity
A great business concept doesn’t automatically create a great brand. Entrepreneurs should have a clear understanding of what their business is and what it isn’t, so they can focus on what their brand truly represents. A clear brand identity provides uniformity and consistent guidelines that will be easy to communicate to franchisees, after all. This allows a franchise to become easily recognizable and build customer loyalty organically.
A Unique Selling Point
The business concept should be compelling and advantageous over potential competitors — something that would be hard for others to imitate. This unique selling point could be an innovation on an existing idea or an offering exclusive to the business, taking care not to let it devolve into pure gimmick. Consumers are increasingly wary of a hyped-up product, so transferring a genuinely good idea to a franchise model will gain any business a loyal customer base.
A Culture of Teamwork
Deferring to the expertise of others does not mean handing over control or ownership of the business to relative strangers. It means acknowledging the reality that a single business owner cannot possibly carry out all the necessary tasks of building a sprawling franchise. Unifying business systems so franchisees understand how it operates will require the skills of industry specialists. PR people, advertising agencies, graphic designers, training experts and legal professionals are just some of the people a business owner will need to get along and work with to launch a franchise successfully.
Franchise plans aside, simply starting a business entails a significant amount of financial risk-taking. Expanding the business naturally requires more money for mobilization, and a willingness to lose everything in case things go awry. Ample cash flow is essential in growing a franchise, but most people get blinded by all the potential rewards to see the reality of an equally likely chance of failure. This should not be a cynical view on franchising, as it is still a promising business move — but it’s always better to manage expectations and be clear-headed when putting considerable assets on the line.
Investing in a franchise requires a careful study of the business model it’ll build upon to give owners realistic expectations and allow them to make an informed decision. If a business possesses all these qualities, owners could put their plans into motion with more confidence.