WHAT ARE THE KEYS TO FRANCHISE SUCCESS?:
Making any business reach its full potential takes talent. If you’ve selected your franchise well, your franchisor will be able to help you avoid many of the mistakes new, independent start-up businesses make. Here are some keys for franchise success.
Make sure you have enough money
- Determine how much you have to invest, how much you’re willing to risk and how much you will need to live on for at least 12 months.
- Make sure you understand the initial investment required.
- Make a careful and rational decision about buying the franchise. Listen to your attorney and accountant and do not be pressured by the franchise salesperson.
Don’t neglect your family and friends
- Be prepared to work long hours, but also make sure to budget time for your family and friends.
- Don’t forget to acknowledge the sacrifices your family makes.
- Allow your family and friends to share in your new life.
Be an enthusiastic franchisee
- The success of any business is linked to the level of enthusiasm you bring to the job.
- Enthusiasm brings a level of excitement and energy to the operation that everyone can feel-including your customers and staff.
- Let your staff in on the fun. Acknowledge their good work with recognition or a raise.
Recruit the best and treat them with respect
- Good help is hard to find-great help is essential.
- To keep the good staff you’ve hired:
- Rotate routine and boring jobs.
- Be fair. Don’t show favoritism.
- Work with your staff to develop the schedule.
- Treat your employees with respect. Don’t allow employees to be disrespectful to any other employee.
- Keep employees informed of new marketing and other promotions.
- Remove hassles-ask employees which procedures are working and which aren’t.
- Make their workdays challenging.
- Provide timely performance reviews and wage salary increases.
Teach your employees
- In franchising, training should be continuous. Employees are you front line.
- Training classes are a good way to show your employees that they matter to you.
- Get all the training you can from the franchisor.
- Regularly train and retrain all your employees.
- Hold refresher and advanced classes on a regular basis.
- Alert your franchisor when you need additional training.
- Take advantage of every training opportunity, whether it’s offered by the franchisor or by local schools, trade associations and other sources.
Give customers great service
- The most important thing you can do is to get everyone to smile!
- Let the customer know you’re happy they chose your business.
Get involved with the community.
Customers like to shop in places that support them.
- sponsor Little League team
- support a civic or youth group
- give tours of your business for school groups
- set up a kiosk at community events
Stay in touch with your franchisor and other franchisees:
- Stay in communication with the franchisor: Letters, newsletters, emails, phone calls, faxes, training classes, regional meetings, conferences and conventions.
- Communicate with other franchisees by participating in the franchise owners association.
Watch the details
- Success is in the pennies! If you watch your pennies, the dollars will take care of themselves.
- Minimize costs and maximize sales.
- Watch out for shrinkage (merchandise that is missing or unaccounted for).
- Work hard every day. Choose your time away from the franchise wisely.
Advantages of Franchising:
- The most common barrier to expansion faced by today’s small business is lack of access to capital. Franchising, as an alternative form of capital acquisition, offers some advantages. The primary reason most entrepreneurs turn to franchising is that it allows them to expand without the risk of debt or the cost of equity. First, since the franchisee provides all the capital required to open and operate a unit, it allows companies to grow using the resources of others. By using other people’s money, the franchisor can grow largely unfettered by debt.
- Franchising allows the business owner to overcome these problems by substituting an owner for the manager. Franchisee will be an owner often with his life’s savings invested in the business. And his compensations will come largely in the form of profits.
- Franchising not only allows the franchisor financial leverage, but also allows it to leverage human resources as well. Franchising allows companies to compete with much larger businesses so they can saturate markets before these companies can respond.
- Franchising allows franchisors to function effectively with a much leaner organization. Since franchisees will assume many of the responsibilities otherwise shouldered by the corporate home office, franchisors can leverage these efforts to reduce overall staffing.
- Franchising provides an ease of supervision for the franchisor with the day-to-day management of the individual franchise units.
- Franchising helps the franchisors to depend on their franchisees to undertake site selection, lease negotiation, local marketing, hiring, training, accounting, payroll, and other human resource function, the franchisor’s organization is typically much leaner.
- The combination of faster growth, increased profitability, and increased organizational leverage helps account for the fact that franchisors are often valued at a higher multiple than other businesses which provides improved valuations.
- The ability of franchisees to improve unit-level financial performance has some weighty implications. A typical franchisee can penetrate secondary and tertiary markets as well.
Pros of Owning a Franchise
- Owners enjoy a certain level of independence
- Wide-spread brand recognition
- A built in customer base
- Quality and consistency are determined by the franchisor
- Franchisors offer pre opening support for site selection, design, training and financing
- Franchises offer ongoing support in advertising, operation, management, and acquisition.
Expanding Your Success
Now, you’re ready to take it to the next level. You want to expand and increase your market share. But, let’s face it, you simply can’t be everywhere at once. You need competent help that’s as invested in your success as you are.
And when it comes down to this, it’s one of the biggest benefits of becoming a franchisor. Every franchisee is as vested in your business as you are – because they’re not just “hired help,” they’re owners with a real stake in the company’s overall success. Of course, that’s not the only advantage of franchising your business. In fact, it’s just the beginning. Let’s take a look at all the benefits you reap as a franchisor.
You’re in business to make money, right? Well, franchising is an excellent means to make more of it. When you sell a franchise, what the franchisee really buys is your proven “recipe” for success: your business model, your brand, your system. In return, you profit – and the original sale of the franchise is just the beginning. As a franchisor, you also collect revenue from ongoing royalties, service fees and the sale of products or equipment.
Increased Market Share
If you want to edge out your competitors, there’s no better way than to develop a strong market presence. With multiple franchise locations, you can rapidly and measurably increase your market share without the hassle – or expense – of establishing company-owned stores. And as an added bonus, every marketing endeavor can be coordinated to benefit each franchise owner and the parent corporation (that means you).
How much does it cost to open a new location? When your franchisees are absorbing the expense, your costs are practically eliminated. In addition to the right to become a part of your system, your franchisees are also assuming the financial responsibility to make the business work. And that includes real estate costs, equipment, furniture, inventory, supplies, employee wages, payroll taxes and working capital.
The benefits are attractive. So much so that, as a franchisor, you may wonder what’s in it for the franchisees. What makes buying a franchise – your franchise – so appealing? It’s an important question because you need franchisees to succeed.
The good news is that the benefits of buying a franchise are just as attractive. For example, your franchisees will gain instant brand recognition, initial training, ongoing support and increased purchasing power all for much less than it would cost to start an independent company.
What’s more, purchasing a franchise is one of the safest ways for entrepreneurs to become business owners. In studies conducted by the U.S. Chamber of Commerce and the U.S. Small Business Administration, for example, it has been reported that while 97% of franchises were still operational after five years, over 60% of non-franchised businesses had failed after only six years. Similar studies have determined exceptional success rates for franchise systems worldwide.