What are the characteristics of a viable franchise?

Author: Shelley Nadler

answered by Shelley Nadler

Legal director at Bird & Bird

Franchises come in all shapes and sizes with varying costs and levels of commitment, but there are many fundamental attributes that can make the difference between a successful one and one that never gets going.The first question at the outset should be: is this business distinctive enough in its total image? Each successful franchised business has its own distinctive branding and an innovative concept that sets it apart from other businesses of the same type. This is what makes consumers choose it as well as, or instead of, others in the same sector. But even a distinctive business can’t go far without finance. Does the franchisor have enough capital and resources to establish and grow its network and does the franchisee have the necessary clout to establish itself in a territory? This is a crucial consideration a prospective franchisor should consider before initiating the process. Of equal importance is the strength of the franchise partner. Does the franchisee have the right attitude and commercial experience to be able to drive the business forward?Above all, adequate support in all operational, financial and logistical areas must be in place for a successful, long-term growth strategy. This requires meticulous planning and an anticipation of needs and the franchisor will need to provide an effective and efficient range of initial services to assist the franchisee in establishing its business, whether it’s through training, introducing the franchisee to its best contacts or even providing an injection of its own capital.Sometimes a good indication of a viable franchise is whether it is a member of a national franchising association. For example, the British Franchise Association says its members have shown and will show important characteristics, evaluated on a set of criteria based on the European code of franchising ethics, in order for them to receive bfa accreditation. As such, bfa accredited franchises are viable and franchisable, aspects that have to be proven through success experienced by the vast majority of franchisees over an extended period. MM

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