Positioning Your Business Model
Like any other business, developing a franchise system begins on paper – the business plan. You must position your business in the context of the industry it belongs. The most effective tool to use in establishing this positioning is the competitive analysis grid. Find as many comparable business models using an online franchise directory and commence filling in the blanks as per the criteria in the grid.
Fill in each section of the grid with the most current information available, with as much detail as possible. The factors you will be comparing your competitors against are:
- Products
- Pricing
- Quality
- Selection
- Service
- Reliability
- Stability
- Expertise
- Company Reputation
- Location(s)
- Appearance
- Sales Methods
- Credit Policies
- Advertising
- Corporate Identity & Branding
- Plus any other factors that impact your business or industry
How Does Your Business Stack Up?
You may find that your business is lacking in some of these areas or is not of the same caliber as your competitors. On the other hand, what does your business offer that the franchising competitors don’t? Can this be an innovative advantage?
Your expertise in essential to addressing these questions. Coupled with your market research study, you may find that other franchised concepts are lacking a competitive edge that you may want to introduce.
The success of a franchise system is attributed to more than just the number of outlets your system has in operation. Subway has more franchise outlets than McDonald’s yet each is successful in its own way. People who eat at Subway may also eat at McDonald’s. Your business concept can be successful even if there are multiple direct and indirect competitors in the competitive arena.
On the other hand, you have to determine at the onset of your research if your business has franchising potential. The competitive analysis will raise many questions and issues that will either stop you in your tracks or fast-forward you further into the developmental process.
