How to Franchise – The Common Characteristics of a Successful Franchise Concept

Have you ever wondered about how to franchise your business? Many business owners consider franchising as a way to earn multiple income streams. A successful concept can mean taking your small business to big business…but to understand how to franchise, you need to know the common characteristics of successful franchise operations.

1. Proven success. Businesses that have proven successful at franchising their concept typically have a model or prototype of the business that has been tested, refined, and has been consistently profitable, and this business must be capable of being replicated in other markets.

2. A Unique concept. The business must either fill a gap in existing products or services, or be unique with enough market demand to sustain it…and the demand must exist, in either instance, in every market area that the business (franchisor) wishes to set up franchisees in.

3. Focus. The business model focuses on doing one primary business well instead of being all things to all people, and responds to the changing market. One example of this is the pizza chain Dominos, which focuses its market on carry out and delivery pizza. It does not focus on dine-in, like Pizza Hut, or side dishes. In order to stay at the forefront of their market, they recently introduced innovative new bags for delivery persons to deliver pizza at an estimate of 30% hotter than their competition.

4. A well-written, well-researched business plan.

5. Adequate short and long term financing. There must be enough money for the short and long term to launch the program, sustain it and ensure that there is adequate support and training for franchisees.

6. A Strong Team of Advisors. Every business should have a team in place that understands franchising. This includes management and consultants who understand how to franchise, the businesses’ industry, the competition, and the legal aspects of franchising.

7. Trade Identity. An business identity that is distinctive and can be easily associated with the business. It must also be comprehensive, including a uniform trade appearance, signage, slogans, trade dress and overall image. Additionally, the trade identity must be adequately protected through federal and state trademark registration.

6. Comprehensive operations manual. A thorough, easily understood manual that provides systems for doing every aspect of the business which cannot be easily duplicated by competitors. The manual should also have objective standards for the franchise operation which can be enforced.

7. An Adequate Support System and Infrastructure for Franchisees. This includes comprehensive initial and ongoing training (“how to franchise” for franchisees), operations and employee manuals, field support staff that can support franchisees and monitor quality standards, plus basic information and help for those with little basic business experience.

8. Screening of Potential Franchisees. There are certain characteristics that make up a successful franchisee, and each potential franchisor should have certain criteria that it considers important baselines for franchisees buying into the business. This includes minimum financial qualifications, business acumen, people or sales skills, if relevant, leadership skills.

9. Effective Record Keeping Systems. There must be record keeping systems in place that allow for monitoring the performance of franchisees, ensuring royalties are paid in an accurate and prompt manner, and any other important sales and marketing data.