Proving the business system
Successful businesses franchise to simulate expansion and to reduce the administrative/staffing problems often associated with company-owned outlets. They also seek to benefit from the commitment of franchisees who have contributed their capital to their business and, therefore, have the motivation to be successful.
In order to attract potential franchisees the franchisor needs to prove that the business system is sound and that he/she has considerably reduced the inherent risks of setting up a new business.
It is essential that it has been proved that the business format works well and can be reproduced consistently. It will have been tested in use, by means of at least one (but preferably more) thoroughly market-tested pilot operations run for a minimum of a year in a typical location.
The franchisor is responsible for the maintenance of high standards throughout the franchise and for ongoing support at a level at least sufficient to justify the franchise fees or payments.
Franchising is not a short-cut to riches and automatic success is not guaranteed. However, with a proven business format a franchise owner's risk of failure should be considerably reduced.
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