As a restaurant broker for more than 11 years and a Chief Financial Officer for Universal, the entertainment company, I'm often asked about whether or not someone should franchise their business. I'm no expert in this space, but I am a financial and general business expert with lots of experience in the restaurant industry. I've seen plenty of successes and failures.
So I was asked by Natalie Ramos "I was hoping you may be able to give me some advice on taking her brand national through franchising..."
Of course, every business is different, but there are some basics one needs to stick to if you're considering franchising your business model.
The most important is profit. Before you franchise a business you need to make sure you have lots of profit! As a rule of thumb, the business should net 25% to the bottom-line or more. That's before you pay yourself. Why? Because that's where you're going to make your money as the franchisor. The greater the profit, the more you're going to take and the higher the chances of success for your franchisees. Major franchises such as Subway earn their franchisees 10% with well run stores earning 15+%. I personally think that's thin margins in a business and would like to see 15% or more the the franchisee..... [CLICK FOR FULL ARTICLE]