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When can a business be franchised?
Shelly nadler writes:
Having developed a business concept, it’s essential at least one pilot or operation should be established to ensure the proposed franchise system works in practice.
As a general rule, such pilot tests should be open for at least a year, particularly where seasonal factors have to be taken into account, and preferably two years. Ideally, there should be more than one pilot test to ensure the franchise business model is robust and to eliminate any distortions arising from the results of one unit.
The aim of running a pilot test is to help understand a variety of potential issues and concerns, including whether the business will be successful, how the business can be improved, the acceptability and availability of the product or service, problem areas, marketing methods, the laws and regulations applicable to the franchise, the location of outlets, staff selection and opening hours.
By successfully running a pilot operation, a franchisor will be able to put together all the elements of the franchise package it offers to franchisees.
Shelley Nadler is a legal director in Bird & Bird’s international franchising team and has many years’ experience of advising on all aspects of franchising.
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