Franchisors Can Benefit From SWOT Analysis
by Ed Teixeira
Franchisors can gain significant benefits by using SWOT Analysis to
evaluate their company.
SWOT analysis, which is an acronym for Strengths, Weaknesses, Opportunities,
and Threats is a process used by companies to evaluate their position relative
to a new product introduction, a strategic plan, a business venture or project.
Albert Humphrey, who was affiliated with the Stanford Research Institute over 40
years ago, is considered the creator of the SWOT analysis concept. The SWOT
process is a method of gauging the overall health of a company by identifying
those factors that can impact current and future performance.
A SWOT analysis can be a useful tool for a franchisor. It can be an opportunity
for a franchisor to evaluate and gauge their relative position in the
marketplace. Although, primarily used in concert with a new product launch or
major shift in strategy, the process itself is an excellent way for a company to
perform a thorough self analysis.
Franchisors that use a SWOT analysis need to be prepared to ask some tough
questions and gather the right answers for each of the SWOT categories
(strengths, weaknesses, opportunities, and threats) in order to find their
competitive advantage. In order to obtain particular information franchisees
will need to be involved in various steps of the process. After all, the
franchisees represent the eyes and ears of the franchisor in the marketplace.
When performing a SWOT analysis here are suggestions:
- Strengths: When evaluating itsí strengths a
franchisor needs to determine how it compares versus itsí
competitors. What does the franchisor do better than other
franchisors or other companies? What products or services
offered by the franchisees have a certain uniqueness or value?
Are the franchise and company locations properly positioned from
a market standpoint? How strong are the supply channels?
- Weaknesses: This next step can be the
hardest. Namely, identifying the weaknesses of the franchise.
This step requires objectivity and setting aside egos. What
areas of the franchise operation need improvement? How does the
franchise compare and stack up to competitive franchise
operations? How well are the franchisees performing? Is the
franchise system growing? If not, why?
- Opportunities: Identifying the
franchisorís strengths can lead to uncovering new opportunities.
Is the market for the products and services growing? Can the
franchise expand to new markets? If the franchise corrected some
problem areas of weakness could it lead to opportunities?
- Threats: This step in the process refers to
the challenges and hurdles that the franchisor faces. Are there
new government regulations on the horizon? Are new franchisors
entering the market? Are these franchises large or start-ups? Is
the franchisor properly capitalized? Are there franchise
relations issues? Is it difficult to expand the franchise
Example of a Franchisor SWOT Analysis
- Multiple locations
- Strong franchisees
- North East USA market domination
- Positive franchise relations
- Limited brand awareness beyond North East market
- Older locations.
- 40% need remodels
- Increased supply costs
- Growing market demand
- Introduce new menu items
- International expansion
- Expand franchise network
- Six competitive franchise concepts introduced in past six
- Price competition in marketplace
- Limited capital for expansion
A SWOT analysis is a valuable tool that franchisors can use to evaluate the
performance of the franchise network and identify the critical elements of the
entire franchise operation.
© 2013 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He
can be reached at email@example.com