Franchise Talk

Ins and outs of franchising your business model Part Two

May 27th, 2006 | Author: Jack

Successful franchises are relatively easy to build, staff and operate. More importantly, the franchisor is able to translate its operating requirements into a system that gives all of its franchisees the education, support and resources they require to succeed.

Examples of systems that are easy to replicate include restaurants with limited menus, and businesses with narrow and standardized product offerings, such as Cold Stone Creamery, Bark Busters (home dog training) and The Pooch Mobile (mobile pet wash).

White tablecloth restaurants and service businesses that require sophisticated technical skills are more difficult to replicate.

* Unique marketing proposition.

The final requirement for a successful franchise is that the concept must offer prospective franchisees a marketing or operational advantage over the competition. Successful franchises generally include a distinctive format, operating system or marketing strategy.

Examples include Old Chicago Restaurants, Navis Logistics, The UPS Store and certain hotel chains.

A concept that’s ready to be franchised also must have a fully developed operations manual ready to deliver to franchisees. Finally, the franchisor must have employees who can provide support and teach franchisees how to operate within the system.

The sale of franchises is regulated on the federal level and also in a number of states. To offer and sell franchises, at a minimum, you must prepare a Uniform Franchise Offering Circular (UFOC), a franchise agreement and audited financials. Depending on your growth strategy, you also may be required to register your UFOC in different states before offering to sell franchises in those states.

To assist you through this process, it’s important that you select the right management and legal team, with experience in both franchising and advising startup franchise concepts. Once you determine that you have a winning franchise concept, putting together the right legal and management team can mean all the difference.

Successful franchising requires the right formula. If your concept satisfies the four criteria outlined here, you could be well-positioned to build the next McDonalds.

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