Critical Franchise Decisions
by Ed Teixeira
There are certain key steps that ought to be followed whether youíre a
business owner considering franchising a business or an existing franchisor
looking to go international.
In the world of franchising there are certain decisions that are fundamental to
having a successful franchise company. For independently operated business
owners looking to franchise their concept, certain steps are key. An existing
franchisor making strategic decisions should also proceed in a particular way in
order to achieve a positive outcome.
Here are some key items:
For New Franchisors:
- Before franchising an existing business, register the
trademark. In fact, unless the business is a simple business
concept with no expansion plans it makes sense to register the
marks whether or not the business will be franchised.
- Construct a viable and accurate franchisee pro forma income
statement that is realistic. Donít expect the first group of new
franchisee to perform as well as the founder of the business.
- Have the funds necessary to market franchises. A number of
start-up franchises lack the capital required to generate
franchise leads and recruit qualified candidates and as a result
they have little or no growth.
- New franchisors should expand outward from their
headquarters versus granting franchises in disjointed geographic
areas and markets. This allows the franchisor to nurture new
franchisees and also gain brand recognition by confining initial
growth to a specific market.
For Existing Franchisors:
- Encourage rather than discourage the formation of a
- Do obtain financial information and income statements from
your franchisees in order to know who is profitable.
- Franchisors considering international expansion should
commit to a country only after a market study is completed and
trademarks registration is filed.
- Donít dismiss franchisee complaints out of hand but rather
thoroughly investigate serious complaints with the objective to
reach resolution. Itís important for franchisors to put their
ego aside from time to time in order to prevent a problem from
getting out of control.
These are a few examples of certain decisions that should be made before
taking action. Existing franchisors and business owners considering franchising
would be wise to follow these suggestions.
© 2011 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He
can be reached at firstname.lastname@example.org