Is my business franchise-worthy?
Feel your way gradually to the answer, recommends FSB expert Verne Harnish.
(FSB Online) -- Dear FSB: My parents own and operate a restaurant and general store in a tourist town in the Southeast. I recently graduated from college and have begun to take over more management responsibilities. I am interested in opening multiple locations and possibly creating a franchise. What size does the restaurant need to be - or other goals do we need to achieve - before we can hope to attract the interest of venture capital firms or angel investors to finance more locations?
- Ryan Amman, Manager, Bayou Smokehouse and Grill, Banner Elk, N.C.
Dear Ryan: The key is to perfect what is known as "the economics of one unit." Make sure the first restaurant is running profitably. Then open the second restaurant to see if you can replicate the success of the first. You will most likely have to fund this initial expansion through friends, family and your own money.
Customers might also be interested in helping you. If the second restaurant succeeds, try opening one an hour away. This will show you if your processes work without your being around all of the time. If your experiment succeeds, you will be in a good position to consider franchising and raising serious money.