The primary barrier to expansion that today’s entrepreneur faces is lack of capital. And franchising allows companies to expand without the risk of debt or the cost of equity. Since franchisees provide the initial investment at the unit level, franchising allows for expansion with minimal capital investment on the part of the franchisor. In addition, since it’s the franchisee, and not the franchisor, who signs the lease and commits to various service contracts, franchising allows for expansion with virtually no contingent liability, thus greatly reducing a franchisor’s risk.

We cater to below four important areas:

It needs to be credible. Does your company have experienced management? A track-record over time? Is the concept proven? Have you achieved good local press or public acclaim?

It needs to be unique. Is your business adequately differentiated from its competitors? Is it marketable as a business opportunity? Does it have a sustainable competitive advantage?

It needs to be teachable. Are the systems in place? Are operating procedures documented? Could someone learn to operate your business in three months or less?

It needs to provide an adequate return. I don’t mean just profitability. If a business can’t generate a 15 to 20 percent return on investment after deducting a royalty (typically between 4 and 8 percent), it’s going to have difficulty keeping franchisees happy.

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