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Eight questions to ask before franchising your business
By Chad Finkelstein
July 20, 2011
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Before taking the plunge into franchising your business, there are a number of questions you should be asking yourself. Taking the time to give these ideas some thought, and even putting pen to paper, is likely to get you to better organize your business plan, as well as help you understand the foundation upon which your system and concept will be built. Ask and answer these before getting started:
- What’s the product or service?
- What’s the competition like? Is your product or service unique enough to stand out in a crowded field? Are there any hurdles to entering the market that you should be aware of? Are there regulatory obstacles to franchising a business in your particular industry?
- Will it be manageable for someone else to copy that model under your supervision, or does it only work under your direct implementation?
- How many corporate-owned units do you have, and how are they doing financially?
- What are your financial resources?
- Do you own any intellectual property that needs to be protected, such as trade-marks, or maybe even patents? Are they sufficiently registered and protected already?
- Where will you find franchisees?
- Apart from your support team, what’s your internal team like? Do you have the right people to see your vision through? Are they capable of tracking down the right talent and helping to realize your visions and goals?
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As you develop your franchise system — or more specifically the model you intend to build out as a system — there are numerous factors you need to consider. One relevant consideration will be what your franchise will actually look like. For instance, you may have experienced success in your single location or handful of locations, but once it becomes time to grant someone the right to copy that model, you will need to ensure you have a prototype in place that can be reasonably emulated. If you are a retail store, what type of products will be sold each season? If you are a restaurant, what will the menu be comprised of? Franchisees will be looking to you for this guidance.
Another consideration will be where to find franchisees. There are a few possibilities including conventional advertising but franchise brokers or consultants can be useful in generating leads. |
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Trade shows remain a very viable source of cultivating interest in your brand and attracting potential franchisees and there are a number of franchise organizations and associations that produce these shows across Canada.
You also may wish to jump on the social networking bandwagon to find prospects. Certainly a franchisor’s website is an appropriate forum for generating leads and can be a very useful outlet for potential franchisees to find answers to some of the questions they may have about your system. But reaching out via social networking sites, or setting your online presence up in a way that lets franchisees reach out to you by way of these media, may accomplish a lot in terms of establishing your franchise system as fresh, modern and accessible.
See also:
About the author
Chad Finkelstein is a franchise lawyer at Dale & Lessmann LLP in Toronto and can be reached at cfinkelstein@dalelessmann.com or (416) 369-7883.
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