By operating a pilot franchise, the franchisor can prove the viability of his/her franchise concept and system. It is desirable that the pilot operation be company-owned. It is essential that the pilot should operate as far as possible with the same decentralised system as will eventually be employed for franchised outlets.
Franchising is about building on a simple, easy-to-learn, tried and tested method for conducting a business. The franchisor must be able to demonstrate that he/she has operated that business profitably for a sufficient period of time, and at a sufficient number of locations, to accept and encourage someone to invest their savings in it.
The pilot operation enables the prospective franchisor to assess the factors that will form the basis of the expertise and know-how that he/she will transfer to the franchisee, such as the type and size of location, the equipment required, the operating methods, and marketing and financial requirements.
The successful running of the pilot operation is essential to the preparation of the franchise package. The experience obtained in setting up and running the pilot will provide the basis upon which the elements of the package are structured.