Is your business ready to become a franchise?

Determining the readiness of a business to become a franchise
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Franchising is a special level of business. The strongest and most successful businesses fall on it. Other entrepreneurs want to borrow their methods and technologies, paying a lump sum fee and paying royalties.

This level is extremely desirable for entrepreneurs, and they want to get to it at any cost.

However, not every business is ready to become a franchise.

I lead franchise development projects, and my most important task is to screen out and not work with businesses that are too early to become a franchise, or have other obstacles to becoming a franchise.

Over the years of work, I have developed my own checklist, a discrepancy on at least one point of which indicates that it is not worth going into franchising the company yet.

This checklist lists the main criteria, mandatory points that must be met in order for the business owner and the market to receive a franchise that will have potential and interest for potential franchisees.


Earning machine
Your business knows how to make money and is ready to prove it.
Franchising is the transfer of a proven and working business system.
A successful business is, naturally, one that makes money.
Typically, a franchisee invests his own savings, so when he buys a franchise, he expects to receive a proven system that will reduce risks before opening on his own. Before you package your franchise and open sales of your franchise, answer yourself the question: “Will my business really bring profit to the franchisee?”
Repeating your own success
The franchisor must open at least 2 of its own properties before launching a franchise.
In order to transfer its business system to partners, the franchisor must confirm the functionality of this system.
The success of one discovered object may be dictated by random luck or the influence of some hidden factor. The presence of two or more objects indicates that the business is ready to replicate.
Track record
The success of a business must be proven over time. Minimum period: 6-12 months.
If a business launched less than six months ago and is already approaching the launch of its own franchise, this indicates its immaturity.
During the first year, seasonal fluctuations occur, and without encountering them, it is too early to draw conclusions about the profitability of the business and its readiness to scale.
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Well-established processes
When launching a franchise, you need to be ready to accept new partners and include them in the organizational structure.
Finding partners, signing contracts and only then raising the question of creating processes to launch and support these partners is a very dangerous path. It guarantees that an insufficiently regulated system will be built and problems will arise with partners that were launched during this initial period.

Very often in Russia there is an approach: “I launched a franchise, I understood everything, but now I need to remove the current partners who work according to the old rules and recruit new ones.” Why not immediately invite franchisees into a regulated and regulated system?
Budget for starting a franchise
Creating and developing a franchise is quite expensive.
Some companies view franchising as a lifeline, a means to stay afloat by attracting new partners and their investments. However, this assumption is often misguided. If an underlying business is fundamentally flawed, franchising will only amplify its inefficiencies, replicating them across multiple locations.

Franchising is a costly endeavor, demanding significant financial resources and time commitment. Expenses accrue from various aspects, including promotion, advertising, staffing, development, and ongoing support for franchisees.

Therefore, it is crucial for companies considering franchising to carefully evaluate their financial situation and prepare a comprehensive budget.
Lawyer specializing in franchising
A franchise network lawyer handles franchise agreements, which are quite complex. Before you launch a franchise, you must have such an employee.
A commercial concession agreement, which is usually concluded within the framework of franchising, is a voluminous and detailed agreement.
A lawyer with insufficient qualifications may not be able to develop such an agreement! In addition, difficulties may arise during network maintenance.
Founder Involvement
Once you start a franchise and start franchising, you need to devote 100% of your working time to achieve results in this direction.
It is impossible to engage in franchising only partly. It requires the leader to be fully involved.
If you own a restaurant and decide to launch a franchise, then you should delegate the management of the restaurant and devote all your working time to franchising.
A company's entry to the franchising level requires preparation and mobilization of all resources. The business itself must show such results that this model is worth copying and borrowing.

Franchising is a scaling tool. If the business is successful, you scale the success. If the business is unprofitable, then you scale up the problems and losses.