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Franchise Q&A


Nick Williams


Managing consultant with Ashtons Franchise Consulting


A: There are a number of checklist boxes to tick if you want to become a franchisor, such as: A proven system: As a franchisor you will have gone through the learning curve, identifi ed the pitfalls and found appropriate solutions. The franchisee can then be shown a business model that works. The franchisee should be replicating a tried- and-tested business system, rather than experimenting with new ideas. Branding: Strong branding is fundamental. People want to invest in a business that portrays a strong corporate identity and has a brand suitable for national or international recognition. If your trade name has been formulated around a local region and won’t ‘travel’ well nationally, it may be best to formulate a new brand before franchising is undertaken. The brand should be simple and shout out the message of clarity, professionalism and quality.


Corporate image: The corporate image of a business is portrayed through external signage, a protected brand, name, corporate colours, vehicle livery, uniform, website design, promotional material, own- label products, stationery or whatever is appropriate for your business. It is important to have developed a strong and consistent corporate image throughout all aspects of your operation. Replicable: The basic business process must be teachable within a reasonable period of time. If your model requires special skills then the fi eld of potential franchisees may be reduced. Many franchisees, however, are businesspeople with the experience to run a business who will then employ staff with the necessary technical aptitude to carry out the franchise service.


Q: I already own a successful business, could I offer it as a franchise opportunity to other people?


Historical trading performance: Franchising is about replicating a fi nancial model that has already been achieved, so it is imperative that there’s been suffi cient trading to give realism to any fi nancial projections. As with the fi rst point – can you prove you are a tried-and-tested system? Products and services with good staying power: Franchisees do not wish to make a long-term investment in a business where the product or service may be a passing fad or is in danger of becoming obsolete over time. Discerning prospective franchisees will be looking for deliverables that are necessary throughout varied economic conditions. Suffi cient profi t margin: There needs to be suffi cient operating margin. That is to say, the franchisor must have a profi t margin suffi cient to provide good backup and support and maintain a healthy research and development programme, and the franchisee must have suffi cient margin to build a rewarding business and to recover their investment over the life of the agreement. It is important that any mark up on product supply or management service fee provides a win-win situation, that enables the franchisee and the franchisor to succeed together.


Management attitude: The attitude of management towards franchising is key to success. Franchisees are not the same thing as employees; they are self-employed business owners who must be treated as equals. While the franchisor needs to lead with authority, franchisees should be given the opportunity to have their ideas and suggestions heard and discussed. The franchisor’s objective is to build a successful business through the successful development of its franchisees.


May 2018 | BusinessFranchise.com | 23


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