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What does the term ‘pilot test’ mean in relation to franchising?
It is important that a franchisor has adequately pilot tested its franchise system so the franchisee can be satisfied he is investing in a concept that works and a business that has been thoroughly tested. It is essential that a franchisor has operated at least one pilot operation, and in many cases a number of pilot operations should be established. Piloting should take place in locations similar to or representative of the locations in which it is anticipated that franchisees will operate. It may also be necessary to keep the pilot operation running for extended periods, generally in excess of 12 months, particularly where seasonal factors have to be taken into account. A pilot operation will:
• Provide evidence of the marketability of the goods and/or services being provided to the consumer.
• Identify the location, nature and extent of premises for the operation of the franchise or, if the operation is mobile, the optimum method of fitting out and equipping the vehicle.
• The optimum use of equipment for the franchise.
• Develop an operational manual with full details of the system to be used in training franchisees and to provide a record.
• Establish business, operational and marketing systems. As a potential franchisee of a new franchise system you need to satisfy yourself that the pilot testing carried out by the franchisor was adequate.
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£120,000 net profit
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