preparing for franchising - concepts of franchise ability

Preparing for Franchising

With Ms. Carlyn Villareal

Concepts of Franchise ability

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“Concepts of Franchise ability”

D E S F T I X R P W O

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P R O F I T

D E S F T I X R P W O

1. Profitability


Profitability is the primary goal of all business ventures. Without it the business will not survive in the long run.

To most franchise owners, profitability is the single definition of success.

“The greater the profits, the greater the success.”

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2. Flexibility


The lack of flexibility inhibits the growth of the franchise and eventually makes it an unviable business proposition.

This flexibility of the franchise system should allow the franchisors to tailor all their marketing efforts to meet not only the legal requirement of the local market, but also the cultural and behavioral aspects of the local market.

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3. Transferability of a Business Model


A firm that intends to implement growth strategy through franchising route should be able to ensure whether the business model is transferable to the franchisee.

The transferability of a franchise model depends on the degree of complexity of a system.

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4. StandardizationConcepts of Franchise ability

The franchise manual contains all minute details about the conduct of the business.

The standardization of the product/service offerings and other related areas help franchisors maintain uniformity of operation across the system and consistency in the quality of services being provided by the franchisees.

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5. PrototypeConcepts of Franchise ability

The firm willing to franchise out its business must develop a successful prototype in order to train the potential franchisees the way of carrying out its business.

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6. TrustworthinessConcepts of Franchise ability

The firm must, in order to sell franchises, establish its creditworthiness in the eyes of its prospective franchisees.

Function of several variables such as:• Size of the organization• Number of years of operation • Number of franchised units in operation • Brand awareness • Brand equity • Reputation of the management of the firm • Commitment to relationships

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7. Management competencyConcepts of Franchise ability

It is essential that the management should be competent enough to identify the right entrepreneurial talents at various places, convert them as territory business partners (franchisees) and establish a strong relationship with them in order to ensure a system-wide success.

Reference:“Retail Franchising” by Manish Sidhpuria

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