A franchise is a legal relationship between the owner of a trademark, product, or service and an individual who wishes to use that same identification in his or her business.
Perhaps you have a business that could be easily replicated and would rapidly expand through franchising. Here are some aspects of a successful franchising operation:
1. Easily Taught
For a franchise to be effective, you should be able to create a manual that clearly outlines aspects of the business for a potential franchisee. Design a simple training program that will teach all potential owners and employees everything they need to know. If your business model is based on knowledge that is only known to you, it may be difficult to share this information. In that case, franchising will not work for you.
2. Easily Replicated
To build a sustainable as a franchise, your business should appeal to people across different geographical regions. Document all business operations so that a potential franchisee can successfully replicate it elsewhere. If your business idea is based off the location where you currently operate, it will be hard to repeat. The affordability of the local real estate market could have a significant impact on the ability to start a successful franchise in areas such as Manhattan, Boston and San Francisco, where land and building costs are quite high.
3. No Legal Restrictions
Both federal and state governments have rules and regulations when it comes to selling franchises. Some individual states actively keep track of territorial rights between you and potential franchisees. A number of states actually put limits on any transfers of your franchises. If this will be problematic for your business, that may be something to consider.
4. Sufficient Revenue
The start-up process for turning your small business into a franchise will be expensive. Attorneys who help you with legal regulations and documents, a new marketing plan for your franchises, and the training program for potential owners and employees will all cost a lot of money. Even if you are confident that your business is generating enough revenue to turn into a franchise, don’t forget the start-up costs.
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