9 Point Checklist For Franchise Readiness

It’s time to answer the question “Is my business franchise-able?”

Franchising is a preferred way of business expansion, allowing the brand to multiply it’s footprint at a much faster pace. The first step in this process is to do a detailed study to evaluate if your business is Franchise ready. Retail Connections has put together a few key areas you must evaluate to judge your readiness.

Brand Uniqueness           

A unique selling proposition will attract potential business owners to invest in your business. You can identify the uniqueness of your brand or what sets it apart from competition. In other words, answer the question why must an investor select you over a competing brand or investment. Perhaps you may have a cheaper product or one that has superior features or one that fulfills a new need. Brands that can differentiate themselves have greater success in attracting franchise investors.

Brand Credibility

Prospective franchisees will study the brand organisation, company management, number of years in operation, turnover, success graph, sample stores, brand identity and awareness, marketing initiatives, potential to develop sales through the brand and reputation. to name a few. Investors are drawn to brands which exhibit long standing success in business and maintain good relations in the market. A good score will set your franchise journey to a good start.


If you can replicate your success across multiple locations, franchising is a viable option. If, however due to patented business processes, trademark limitations or other reasons you are unable to share your business, manufacturing or operation processes, franchising becomes a challenge. Some of these challenges can be worked out based on the specific business. Transferring of knowledge is one of the key requirements in a franchise transaction. Franchisees need solid outlines for operations, communications and services.

In addition, you should be able to thoroughly educate a prospective franchisee in the business processes, in a relatively short period of time.

Geographical Adaptability

If you are looking at taking your brand across marketplaces, then it is important to measure how adaptable your concept is over different geographical markets. This is key, as across different markets there may be variations in consumer preferences, culture, tastes, trends, weather conditions to name a few. This could necessarily mean that the brand may have to consider modifications to products or services before operations commence. You may also want to study the state laws and regulations especially for your specific product category, as different states and countries may have different taxes and policies.

Proven Operation Systems

Franchises having a proven system/store/model are more successful in attracting potential investors. Franchisees are able to study these models and be satisfied with their functioning. Further these models also serve as a rich source for training new franchisees and testing new products and services. They also provide a perfect setting for testing new marketing techniques and gain valuable customer insights.

Documentation of processes & Integration of systems

As a successful business you have certain systems, processes and policies in place. It is important that you are able to communicate these to the franchisees. It calls for a complete documentation of policies, procedures, systems, forms, and business practices in a comprehensive and user-friendly operations manual and/or computer-based training module. It also helps if your business is connected through technology allowing easy integration of units across this new channel of distribution.

Returns On Investment

The franchise at the end of the day must be profitable to provide a solid return on investment on the time and money invested. And this will be the final deciding factor in the marketability of your franchise business. What kind of returns on investment are possible after royalty and other costs deductions? How attractive is your proposal against other businesses that are competing for the franchisee’s wallet? What is the risk factor involved?

Market Size

The size of the market/industry you operate in must be large enough to provide ample business opportunities for new entrants and long-term expansion. Markets that are consolidating offer lesser growth opportunities. It would also be fruitful to study the trends in this market to evaluate long term viability and justify franchising the business.

Brands also need to study how competition is behaving in this market and how the competitive situation would affect the business.

Investment Capacity

In a franchise system a sizeable investment in business expansion is by the franchisee. However, as a franchisor you must be prepared to invest capital and resources to build the franchise business. Marketing, personnel resources, product development and modifications, system development, technology additions, documentation may all add up to a considerable amount depending on the extent to which you choose to expand.

Willingness to Decentralize

As a business owner you may have managed and made decisions on your own. However, in franchising you will not be able to take all the decisions and have to be willing to decentralize your business and work with multiple experts in marketing, human resource, training, legal, etc. It also means forgoing the day to day decision making authority to franchisees who will run your business from different locations. Though that may sound scary, you can build a cohesive brand keeping every franchisee on the same page, with unified business systems.

If you were to score above 8 on a scale of 1 to 10 (10 being highest) on this preliminary assessment, you rate well for consideration to start a franchise business. Feel free to contact us to know how you can prepare your company for franchising.

You can also get in touch with us for a detailed study of checking your preparedness to begin the franchise journey and receive inputs on what lies ahead.