How to Determine if a Business Is Franchise-Ready
The owner of three successful Florida restaurants, David Suleiman has been awarded the Best Operator of the Year for having the fastest-growing Johnny Rockets franchise for three consecutive years. David Suleiman understands the intricacies of franchising.
Franchising is a proven marketing technique that has generated billions of dollars in revenue for global brands such as McDonald’s, KFC, Burger King, 7 Eleven, and Marriott International. Meeting quarterly earnings and minimizing operating expenses are not enough to warrant a franchise-ready business. At the very least, a company is ready for franchising if it has a proven track record for being profitable and if the business model can be replicated.
Typically, the business has generated positive, increasing net income for more than three years. Starting a franchise program requires substantial initial capital, and to get the return on investment within the expected timeframe, the business must maintain a positive operating profit margin.
Another prerequisite when embarking on a franchise venture is a consistent business model. Will the business thrive with different management in a new location? Do the company’s products or services offer a solution to a universal problem? If the business model can be replicated, and new owners can function well on their own, the business is a good candidate for franchising.