Franchising: The Four Qualities

The range of franchising definitely gives the impression that there's only few forms of business activity that could be successfully be adapted or converted to the format. But as with all forms of business ventures, it takes cautious planning as well as a definite degree of business savvy to pull it off. A business' franchisability, or the degree to which a specific business stands a reasonable chance of developing & maturing depends on characteristics. A business' chance of success is diminished if any of these is missing. The are standardization, unique selling proposition, ease of operation & finally, the gross margin on sales. Note that these characteristics mostly apply to business format franchises (where in the franchisor licenses out a business as well as a business operating technique), & not necessarily to product franchises.

Standardization is, basically put, keeping things uniform & the same. The business must lend itself to replication. It is not a matter of each outlet being merely similar, they ought to be as near as feasible identical. It ought to make use of the same goods or services in the same way: every brand, logo, & picture. It ought to make use of the same business operating technique: the same financial, marketing & accounting systems. It ought to make use of the same menu, same promotional material, all staff trained to the same professional standard. After all, while franchisees own their business, they are unified under the same brand. Every franchisor wishes to maintain a tight grip of the quality delivered by everyone operating under the banner of the company name. Of work this does not insinuate complete uniformity. In theory every branch starts out with the same chance of success as the other. Some only try harder, smirk more often. No amount of standardization will hold back anyone who is committed to great customer support.

The unique selling proposition, or USP, is basic marketing: what makes you, your product, your service, your business more special than all the others? This business principle also applies to franchising. Your business ought to have some property or quality to make it stand out if it aspires to survive. Again, most businesses depend on their brand name as their USP, but truly innovative businessmen will think of ways while staying true to the brand.

Since franchises work best in the event that they involve small-scale manufacturing because these ventures are designed to provide services or products to a limited geographical area, it follows that the businesses must have ease of operations. This is the reason why these types of businesses exist to start with - to make delivery of products & services faster & simpler. This also goes for the management aspects of handling the business: training ought to be uniform & adequate.

The gross margin on sales fundamentally means that under the franchising method, both franchisor & franchisee will need a cut of the profits. This is a often asked query - why do the franchisors deserve getting continuous shares if the franchisee does all the work? Well, franchisors came up with the business idea & who trained & supported the particular business branch. So in case you are assessing a franchising opportunity, bear in mind that you need to be able to generate sufficient income to keep both you & your franchisor happy.