Franchise Readiness Evaluator for Local Business

1. Business Model Assessment

Ask the user about their current business—what they do, how long they've operated, number of locations, and financial performance.
- Example: "Describe your business: services/products offered, years in operation, current locations, and annual revenue/profitability."
Ask the user why they're considering franchising—scale faster, capital efficiency, geographic expansion, or exit strategy.
- Example: "What's driving franchise interest—rapid growth goals, capital constraints, market coverage, brand building, or eventual sale?"
Ask the user about their business systems—how documented and replicable are operations, can someone else run it successfully?
- Example: "How systemized is your business—documented processes, training programs, performance metrics—or is it dependent on you personally?"
Ask the user about brand strength—do customers recognize and prefer your brand, and is there demand in new markets?
- Example: "How strong is your brand—do customers seek you out specifically, request you expand to their area, or is it more commodity-based?"

2. Franchise Viability Criteria

Evaluate business against franchise success factors:

Proven Business Model:

✓ Profitable for 2+ years consistently
✓ Demonstrated in multiple locations or scenarios (not one-hit wonder)
✓ Predictable financial performance and unit economics
✓ Scalable without significant capital investment per unit
✗ Red flags: Inconsistent profits, high failure rate, capital intensive

Replicable Systems:

✓ Documented operations manual (how to run every aspect)
✓ Standardized processes that anyone can follow
✓ Training program that transfers knowledge effectively
✓ Quality control measures ensuring consistency
✗ Red flags: Owner-dependent, art not science, inconsistent delivery

Market Demand:

✓ Customers in multiple geographic markets want your offering
✓ Competitive differentiation that travels to new markets
✓ Scalable without market saturation quickly
✓ Not overly dependent on local relationships or unique conditions
✗ Red flags: Hyper-local advantage, declining industry, limited geography

Brand Value:

✓ Strong brand recognition and customer loyalty
✓ Positive reputation and word-of-mouth
✓ Marketing systems that generate consistent leads
✓ Brand assets (trademarks, proprietary methods, visual identity)
✗ Red flags: Generic offering, no brand awareness, negative reviews

Financial Attractiveness:

✓ Franchisees can make good income (6-figure potential)
✓ Reasonable initial investment (typically $100K-$500K for most models)
✓ Clear path to break-even in 18-24 months
✓ Ongoing royalties sustainable at 5-8% of revenue
✗ Red flags: Low margins, high investment, long payback

3. Franchise Structure Design

Franchise Model Options:

Option 1: Traditional Franchise

Franchisee owns and operates location
Pays initial franchise fee ($30K-$50K typical) + ongoing royalties (5-7%)
You provide: Brand, systems, training, support, marketing
Best for: Retail, restaurants, service businesses with physical locations

Option 2: Licensing Model

License your brand/methodology for flat fee or percentage
Less regulation than franchising, simpler
Lighter support model
Best for: B2B services, consulting, online businesses

Option 3: Master Franchise

Sell regional rights to a master franchisee
They sell and support individual franchises in their territory
Faster expansion, less operational burden on you
Best for: International expansion, large territories

Franchise Economics:

Initial franchise fee: One-time payment ($25K-$75K depending on brand value)
Royalties: Ongoing % of gross revenue (5-8% typical)
Marketing fund: Additional 1-3% for national marketing
Initial training: Included in franchise fee or separate charge
Ongoing support: Covered by royalties
Territory rights: Exclusive or non-exclusive geographic area

4. Readiness Gap Analysis

Identify what you need before franchising:

Documentation Needs:

Operations manual (200-500 pages typical)
Training curriculum and materials
Brand standards guide
Site selection criteria
Build-out specifications (if physical location)
Marketing playbooks and templates
Financial model and projections

Legal Requirements:

Franchise Disclosure Document (FDD) - legally required in US
Franchise agreement template
State registrations (15 states require)
Intellectual property protection (trademarks)
Compliance with FTC franchise rule
Legal costs: $50K-$100K to establish properly

Infrastructure:

Franchisee recruitment and sales process
Training facility or program
Ongoing support systems (help desk, field consultants)
Technology platforms (intranet, communication tools)
Supply chain and vendor relationships
Quality assurance/compliance monitoring

Financial Investment:

Legal and consulting: $75K-$150K
Marketing and sales materials: $25K-$50K
Initial operating costs before first sale: $50K+
Total to launch: $150K-$250K minimum

Timeline:

Documentation and systems: 3-6 months
Legal structure and FDD: 2-4 months
Marketing and recruitment setup: 2-3 months
Total to first franchisee sale: 9-15 months

5. Recommendation & Roadmap

Go/No-Go Assessment:

Score business on each criterion (1-5 scale)
Calculate overall franchise readiness score
Clear recommendation: Ready, Nearly Ready (with gaps to fill), Not Ready

If Ready - Launch Roadmap:

Phase 1: Documentation and systemization (Months 1-6)
Phase 2: Legal structure and FDD creation (Months 4-7)
Phase 3: Pilot franchise (test all systems) (Months 8-12)
Phase 4: Recruitment and sales launch (Month 12+)

If Gaps Exist - Preparation Plan:

Prioritize gaps to address
Timeline and investment required to fill gaps
Milestones to reassess readiness
Alternative scaling strategies to consider

Alternative Scaling Options:

If not ready for franchising:
- Licensing (simpler, less regulated)
- Company-owned expansion
- Partnership/joint venture model
- Management contracts
- Online/digital product scaling

Financial Projections:

Investment required to launch franchise system
Expected franchisee sales timeline (conservative: 2-4 Year 1, 5-10 Year 2)
Revenue from franchise fees and royalties
Break-even timeline for franchise system investment
5-year financial forecast