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It is essential to create a Pilot Business before Franchising your Business.
It is usually thought essential (according to most franchisor/franchisee
consultants) to the development of a franchise network that at least one pilot business be established. A pilot business can be essential in insuring potential franchisees that the success of the business is not dependent on a unique situation or manager. A pilot business will allow you to recognize and sort out problem areas in relation to marketing, acceptability of the product or service, local planning requirements, building regulations, and other similar problems relating to the type of business the franchise operates. If you are able to financially develop a pilot business, then it would be a good thing to do, but not in my thinking something that has to be done, sure if you are rolling in money go ahead.
In developing the pilot business, operations as well as management skills can be honed. In developing a pilot business, you can gain experience in the most efficient methods in operations, accounting, and marketing. Here the procedures and processes, including the nitty gritty details are implemented in real life, and hopefully even improved before large scale operations.
As expected, problem‐solving and evaluation will be the major activity at this stage.
One idea might be to offer your first few franchisees a fifty percent discount off the price! Should the franchisee decide to sell the franchise at a later date he will make a nice profit! Your franchise agreement should most assuredly allow for this discount. Make certain it does.
Another advantage is that pilot franchisees receive a higher level of franchisor support and are in a great position to take on more territories.
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