Do Business Well

Franchising has many outstanding qualities and its merits are not under dispute. Unfortunately, this has persuaded some proponents of the concept to overshoot the mark somewhat by recommending franchising as a cure-all for all business ills. It is not! Whilst business failures in franchising are relatively rare, they do occur. When this happens, casual observers are quick to blame franchising. Should they bother to carry out a proper post mortem, however, they would soon realise that in most instances, it was not the concept of franchising that should shoulder the blame for the business failure but its faulty implementation.

The first question novices to the franchise scene would be well advised to ask comes in two parts, namely “what is franchiseable” and “what can I realistically expect a franchise to do for me?” It may not be what you want to hear and, although the fortunes of the franchisor and the franchisee are inextricably intertwined, the answers offered to prospective franchisors and prospective franchisees will differ.

The mere fact that someone calls something a franchise will not ensure its success. Figure 5 lists a series of preconditions that must be in place before the owner of a business should even begin to consider franchising as an option for the expansion of his business. Some other considerations of equal importance are:

• Is the business affordable? High investment levels tend to attract investors rather than owner-operators; in franchising, this is generally frowned upon. (The reasons for this will be explained later.)
• Is the business know-how easily transferable? Lengthy training periods tend to scare away prospective franchisees. There are two reasons for this:

The largest number of prospective franchisees are people approaching early middle age and with family responsibilities. They will be reluctant to enter into a venture that would leave them without an income for a long time.

• Can break-even be achieved relatively quickly? Apart from having limited capital, most franchisees are lacking the necessary confidence to cope emotionally with financial losses sustained over a long period.

If you want to join the ranks of franchisors, it will not suffice to merely have your house in order, it must be in peak condition all-round. Be sure to have a viable concept, adequate funding and a clear understanding of what becoming a franchisor really entails. Above all, you must have the resolve to build your business empire through others and the ability to enjoy watching them grow.

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