Friday, September 07, 2007

Build upon Existing or Start Anew?

Stephen Gibson, founder of A.C.E., writes in Microfranchising: Creating Wealth at the Bottom of the Pyramid,

“In order for microfranchising to be successful, the business that is to be replicated must have established itself as a profitable model that is worthy of replication.”

This statement grows out of Gibson's personal model of selecting 'worthy' businesses from his graduates at his Academy and helping them to replicate. I do think the strategy has particular merit but it is not mandatory. Selecting an existing profitable model in the marketplace helps to ensure that the model is culturally appropriate, that it has been incubated by local entrepreneurs, and passed a first survivability test in the market. However, I think the power of branding and franchising is understood well enough now that one can design a business as a franchise from the very beginning of operations. In line with the vision espoused in the famous E-Myth, an eye to systems, manuals, and replication from the beginning can lead to quicker growth and ultimate success.

My question for the readership is, how long is ideal to allow a pilot to prove itself worthy? What would be particular signs that the model is ready to be replicated and scaled up?

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