20 Key Questions: Should You Franchise Your Business?

There are a number of variables that a business must consider before embarking on a franchise development program. As a first step in determining the viability of franchising your business, the questions listed below should be carefully considered. Although there are additional factors that enter into the decision to franchise a business, the number of positive responses to these questions is a good indicator of your company’s franchise potential. 

1. Does the business operate following prescribed processes and procedures (either written or oral)?
2. Have you developed proven advertising and marketing programs, sales techniques and other methods to attract customers to your business?
3. Can others be trained to duplicate your business system?
4. Is there more than one location currently in operation?
5. Has the business been in operation for more than two years?
6. Is your industry projected to grow?
7. Will the current operation serve as the prototype for the franchise model (with minimal changes required)?
8. Is the business unique within its industry?
9. Is the business a new concept?
10. Are there proprietary aspects of the Franchise Business (i.e. products, services, equipment, recipes)?
11. Have sources of supply for equipment, fixtures, furnishings, products and supplies been identified or established?
12. Have individuals/investors expressed interest in opening a “franchise” of your business?
13. Do your customers/clients ask, “is this a franchise?”
14. Is the business profitable?
15. Are the profit margins sufficient to permit a percentage of gross sales to be paid by the Franchisee to the company in the form of royalties and still provide a fair profit to the franchisee?
16. Will the projected initial investment relative to purchasing and starting the franchise (i.e. franchise fee, equipment, supplies, materials, etc.) permit the Franchisee to earn a fair ROI?
17. Do economies of scale exist related to inventory/product purchases, advertising, and/or administrative functions as additional locations open?
18. Has the trade name that will be licensed to franchisees been registered with the U.S. Patent & Trademark Office or on the state level?
19. Does the company enjoy a good reputation among consumers and suppliers?
20. Do you have existing employees in mind to assume specific responsibilities within the franchise operation (i.e. training, ongoing support, administrative)?

Although few companies can answer "yes" to every question, the number of positive responses is a good indicator of your company's franchise potential. If you answered "yes" to a number of these questions, you should consider the benefits of franchising your business.