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The Success Rate of Franchising

Anyone that seriously examines the growth rate of franchising as a method of promoting will agree the expansion has been phenomenal to say the least. Going back over 150 years back when frontman producing started offering distribution licenses to individual in the promotion, sales, training and repairs of their stitching machines, who would have thought franchising would be what it is today? Over 2,500 firms have expanded regionally, nationally or worldwide in the offer of their system of engaging in business.

Franchising is all about brand recognition. When a franchisee buys into a franchise, they have a prebuilt image and customer base. Average businesses have to build this kind of recognition over many years, often decades, 80% of new businesses fail within their first two years. It is easy for a business to go unnoticed if it lacks advertising and brand recognition.

Intensive studies were done and one dazzling fact that was sudden was revealed. The rate of failure was only 3.7% in franchise businesses. The question was asked why so low?

The answer is extremely simple. Franchisors spend a huge amount of time improving their system of conducting business and documenting each aspect of the business so that franchisees benefit. Franchisors build their ‘Marks’ so that the public becomes knowledgeable concerning the products and services of the business. Most significantly, the franchisor screens and qualifies every individual who makes an investigation into the franchise business. A franchisor has a profile of who they want as a franchisee. Not everyone can qualify or fit the profile.

Once a franchisee is selected an intense training program is provided that offers both school room and hands on training. Every aspect of the business is presented in detail from pre-opening assignments, inventory control, accounting, advertising, promoting, hiring, daily procedures, buying apparatus and supplies and much more.

To enforce the training, the Franchisor loans a copy of the operations manual to the franchisee. This manuals contains everything associated with the business from ad layouts to forms, specs for appliances, and step-by-step procedures in the operations of the daily business.

Additionally, to the training program and operations manual a franchisor will even be present for several days when the franchisees business is prepared to open its doors for business. This support gives the franchisee a comfort section for his business.

After the business has operating for several months, the franchisor shall visit the franchise operation to make sure that procedures are being followed and the business is maintaining the image that the franchisor wants projected.

Author: Ken Hollowell, President/CEO of Profran Consultants has over 30 years been consulting with companies wanting to become a franchisor and develop a franchise system. Ken Hollowell has developed over 800 franchise business throughout the world. He is one of the most sought after franchise consultants in the USA.

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