Can your business be franchised?

Can your business be franchised?

Can Your Business Be Franchised? If you have a thriving business that is receptive to a regional or national marketing system, then franchising may be the right choice. To help you determine whether your business can be franchised, evaluate some of the qualifiers outlined below.

First, evaluate yourself as a prospective franchisor. Franchising is more than selling services or products. You will also mentor, coach and continuously support your franchisees. You will also collect an initial fee for the franchisee to start a business and then receive royalties for the life of the franchise.
Always remember to allow your individual franchisees the flexibility to run their own business and always allow them to act as independent business owners, not employees. It is important to detail the franchisee relationship guidelines in the original contract, franchise disclosure document, and all communications to franchisees.
Do not consider franchising your business unless you have an identified local market for your product or service. Marketability is determined by need, and need is determined by competition. If you have a unique way of running a business and you have a unique business model, it is possible to franchise it.

Search is the main force here. It is as central as uniqueness. Your unique product or service must be desired not only by the business people who want to buy a franchise from you, but also by the people who will buy products or services from those franchisees. If your product or service is relatively new and not widely offered by anyone else, but is in demand, you must first determine where your products or services will be sold based on the requests of your current customers.

If your product or service is not new, you can hire market research firms to create reports on consumer types in different regions. You can also do your own research on the Internet. Government agencies may also provide demographic information and market research data. The US Department of Commerce, Bureau of Economic Analysis, and the US Department of Labor, Bureau of Labor Statistics, have conducted extensive studies on regional consumer behavior. Look for “user habits” on these government websites. If your product or service is unique or in demand, ensure that uniqueness by using a product trademark or a service mark for services so that the public associates your product with a particular trademark. Apply for a registered trademark as soon as possible before the first franchise agreement is proposed and reached. Make sure no other entity has already obtained the rights to your brand. You can do it for less than $600 by contacting one of the many trademark search firms or by visiting online at

Before starting your franchise plan, prepare a comprehensive business plan so that you can consider the financial costs that each new franchisee will require to get up and running; then contrast this with the revenue you can expect to receive from fees, royalties and sales. Include expenses that are specific to the franchise, such as operating expenses such as salaries and benefits for you and head office employees, trainers and sales staff; as well as rent, office equipment, car and travel allowances. Include the costs of finding franchisees – advertising, travel to franchise shows, preparing brochures and videos, and entertainment. Add an appropriate amount for initial and ongoing legal, accounting and advertising fees.

Be very conservative about the time and revenue you require from your franchisees. You will have determined the combination of franchise fees, royalties and product or service sales that will generate income from your franchisees. Estimate when you expect these revenues to be paid, rather than basing your projections on how your business has performed in the past.

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