According to data from the International Franchise Association and IHS Economics, franchise businesses have grown at a faster pace than the US economy for five years in a row. In 2015 the number of franchise businesses grew 1.6% to reach 781,991 establishments. For a business to be successful in franchising, it needs to be prepared through detailed plans in which it seriously evaluates whether its business is a “franchisable” business.
The Franchisor Professional Guidebook goes into detail on all the points to consider when considering franchising a business. Items the potential franchisor must consider:
• “If the prospective franchisee will or will not be profitable,
• If the proposed product or service does or does not have sufficient ‘utility’ or customer demand to develop profits,
• If the business operation is sufficiently attractive for the consumer public, and
• If the prospective franchisee will be more successful developing a business through this franchise unit than through an independent business.”
Over the years many studies have been completed to determine the ideal franchise candidate. Franchisors and professional psychological profilers have spent large amounts of time and capital to increase their chances of gaining a successful franchisee. When evaluating a potential candidate, consider the four essential characteristics of successful franchisees:
1. The franchisee must have people skills
2. He or she must have the ability and desire to follow the system you set in place
3. The franchisee must have a good and self-motivated attitude
4. He or she must also have the capital to meet the purchasing requirements and extensive business experience
In addition to franchisees, it is also important to carefully consider the location of your franchise. Have you researched which geographic areas would be a good fit for your business? Are there other successful franchise systems in your industry that you can learn from?