How To Create Your Own Franchise Business
Part I: Are You Ready To Franchise Your Business?
Franchising is now one of the most accepted and successful business formats. It has made many entrepreneurs rich, not only the franchisees (buyers of the franchise), but also the franchisors (owners of the franchise).
You may have heard of Ray Kroc, a life-long American salesman, who became interested in fast food in 1954 after he witnessed the business the McDonald brothers did at a small restaurant outside San Bernardino, California. He later met with the McDonald brothers, named Richard and Maurice, and worked out a franchising agreement whereby he would sell the business to independent operators, and the brothers would share in the profits.
Kroc envisioned McDonald’s restaurants dotting across the United States, and his vision became a reality years after. Not only did he become famous, he became rich as well because of the McDonald’s franchise.
Today, there are many people who have franchised their business formats, made their franchises grow to national and even to international markets. Success came to them and if you are bold and imaginative enough, it could come to you also – as a franchisor.
In addition, there are presently many business types and kinds which are available for franchise. Ink refills, ice-creams, laundry and dry cleaning, fast food take out and delivery, schools, coffee shops, internet cafes, potato chips stand, and thousand other businesses-you name it, you can franchise it.
If you have a business, it is now time to franchise it, and become a franchisor.
What is franchising? In simple terms, franchising is a business system, a marketing method for distributing goods and services to the consumer. There are two parties involved: the franchisor, who developed and owns the system and lends its name to it, and the franchisee, who buys the right to operate the business under the franchisor’s name and methods.
Why franchise your business? Franchising enables you to expand faster by using other people’s money. By focusing on other business owners, you can generate more cash and labor to tap even distant and out-of-reach markets in different locations at the same time. In addition, franchising gives small entrepreneurs and start ups businessmen and women with limited capital, know-how and experience the opportunity to succeed.
Under the franchise set up, the franchisor provides assistance and support to the franchisee for the use of the brand name, methods and system of doing business, advertising and training, so that the latter can set up the business in his area. In return, the franchisee pays the franchisor the fees and royalties.
How do you know if your business is “franchisable” or can be developed into a franchise? In reality, not all businesses are franchisable. This is because not all formats, systems, and strategies can be transferred, each type of business being unique and different, with its own product/service characteristics, markets, and geographical reach.
However, there are indicators and checklists to determine if your business can be turned into a franchise.
In my next post, I will guide you by giving the checklists for you to evaluate your business franchise prospects.