Facebook Twitter



The franchise industry has shed its mom-and-pop image to become one of the bona-fide business booms of the 1980s.

But before you jump off the deep end and start trying to transform your shop into a national franchise empire, remember that McDonald's and Midas had more going for them than just a good idea.Industry experts say that to be successful, a potential franchiser needs an excellent grasp of his business, a profitable track record and an idea that can be cloned inexpensively.

The franchiser is selling a business system, and the most important thing he or she does is to teach the franchisees how to run that business. That's a difficult task if the prospect doesn't understand the industry or have the necessary technical skills.

William Cherkasky, president of the International Franchise Association, suggests that entrepreneurs either operate a business with three outlets for two years or two outlets for three years before attempting to sell the concept.

"Otherwise, what do you have to sell? Who is going to buy a license that you say might work?" he says. Cherkasky added that would-be franchisers need time to work out all the bugs before attempting to sell their idea.

Franchisers agree that two to three years of experience is a minimum.

"We as a company want to try things first. We don't want to have our franchisees be kamikaze pilots diving into new ideas and trying to survive if they can," said John Shepanek, a former Taco Bell executive who is Smith's partner.

You'll also want to be sure the concept you choose can be easily cloned. The business should be one that can be structured, formated, packaged and sold to others so you'll want to establish policies and procedures, from the paper work to the design of the goods or service that you're selling.

Franchisers say the simpler the idea, the better.

The most marketable franchise operations also have low startup costs. If the business is expensive to enter, you may have trouble selling units, whose streams of royalty payments become your bread and butter.

"If it's an expensive business to enter, it won't be that franchise-able because no one's got $1 million to set up a business," it's been said.