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What does the term ‘pilot test’ mean in relation to franchising?
A ‘pilot test’ or ‘pilot scheme’ is the name commonly given in franchising to a test phase that aims to establish whether a proposed franchise is conceptually and financially sound prior to becoming a fullscale franchise operation. A pilot scheme should allow both a franchisor and pilot franchisee to operate the franchise business. with the aim of identifying any problem or potential problem areas, and consider any lessons that can be learned from operating the pilot franchise business. A pilot scheme should help a franchisor to reflect on the results of the ‘test’ run and assess whether franchising is right for its business and adjust, where appropriate, various aspects of the franchise operation before the franchise concept is launched on a full scale. A pilot scheme should operate in similar circumstances to those that will be operated by a franchisee. It typically need to be run for at least 12 months, or longer if there is a seasonal element, to allow proper time to assess the effectiveness of the franchise. Indeed, it is a membership requirement of the British Franchise Association for a franchisor to run at its own risk, for approximately 12 months, at least one managed pilot scheme. In the event that a pilot fails, it justifies its value by averting more serious consequences of a full-scale operation.
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