Over the years franchising has emerged to be a successful business model for expansion. Franchising helps the franchise in bringing the entire nation under the umbrella of your brand. Healthy relationship is required between the franchisor and franchisee to make franchise a success. Franchise is more like a relationship management that creates the winning situation for both the franchisor and the franchisee.
Here are discussed some factors that need to be considered before planning the expansion of a franchise.
Trustworthy - Franchise business need to be credible and trustworthy. Franchisor should have an experienced management and the business must have a good track record and a proven business philosophy. Acclamation from customers or the local media is also necessary to move ahead in franchising.
Individuality - Individuality or uniqueness of the franchise concept decides its success rate. There are already numbers of players in the market, so you have to be careful in using the USP of your business to gain competitive advantage. Your business should be marketable as a business opportunity.
Learnable - Franchise need to be learnable. The franchise philosophy of the concept should be teachable. It means you should be able to make your franchisees learn the same tactics and techniques in a limited period of time to operate successful business. It is possible only if you have fine documented operating procedures.
Lucrative - Franchise need to be profitable. If the business cannot generate 15- 20 per cent return on investment after deducing the monthly overheads and royalties, then it will be difficult to keep your franchisees with you on a long term relations.
Only if the business meets all the above criteria the business owner should think of franchising. However, before taking up a final call on opting for franchise route, it is very important to develop a sound business plan. The plan must incorporate the vital issues like the tactics to speed up growth, financial analysis in terms of franchise fees and royalty, territorial development, training and support services. Importantly, make sure that you can invest enough time and inclination to support your franchisees.
However, the list is still not complete. Once the business plan is ready, the next important concern is the franchise agreement. Legal documentation is essential, which may include the whole data regarding the franchise business viz. the franchise fees, monthly overheads, royalty, exclusive rights given to the territorial franchisee, training and support, return on investment, property details, break-even period, franchise term, its renewing ability, and so on. The decisions made regarding these complex issues will ultimately dictate your success as a franchisor.
Thus, in case you have a business which is doing perfectly well for quite a long time, and now you also think of expanding its reach across India, then franchising is the perfect option for you. It is like finding a way to expand and maintain the set standards of your business simultaneously.
At the end it would not be wrong to conclude that a business that has the potential to be sold as a franchise opportunity usually have the characteristics such as an established business, its unique selling preposition, teaching ability, and the promise of an adequate return on the investment.
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