Chapter 4. What Business Concepts Can Be Franchised?

To franchise a business successfully, you need a business concept that is appropriate. Unfortunately, many entrepreneurs and managers have tried unsuccessfully to sell franchises for business concepts for which franchising doesn't work very well. For example, franchising doesn't work well in the grocery business because the profit margins are too narrow to support royalty payments. Similarly, franchising doesn't work well for heating contractors because much of the expertise that companies have in this area cannot be written down and instead resides in the heads of company personnel.

In general, three factors make a business appropriate for franchising: The business is based on a proven system ...

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