If you’re a franchisor or have considered franchising your company, you understand what an exciting entrepreneurial opportunity looks like, and you also have inevitably experienced some bumps along the road. As with any business worth anything, there are risks and challenges that come with the job. It’s how you face those challenges and overcome them that can make or break your franchise system.
1. Have the Startup Capital. As with most businesses, the first year is the hardest in a new franchise system. You must be able to support the new franchises and have the means to create and grow the system. Many franchisees underestimate this cost, which of course varies depending on your industry. New franchises need help with operations, marketing, administrative staff, accounting and sales. It has been estimated that it takes about 20 profitable franchises to support a franchise structure as a whole, and it could take a few years to build up this kind of support. Plan ahead and you can be ahead of your competition.
2. Create a Stable Plan. As the franchisor, you are obviously the backbone of the operation. Don’t underestimate the importance of marketing strategies that can translate across the board. How is the corporate location doing? Extensively analyze the company plans and procedures that are working at the corporate level. Do thorough market research for anywhere you want to have a franchise location. Invest in a training staff and specific training procedures for franchisees to take part in. Leave no stone unturned and come up with a solid process plan.
3. Be Picky with your Franchisees. These are the people that will be the face of your franchise system, and quite literally you can’t afford not to be picky when it comes to your franchisees. Come up with a list of specific qualifications that are absolute non-negotiables. Invest in recruiting efforts that have paid off for others. Franchise systems are on the rise, which is great, because people know they work. It also creates more competition for you to find the right candidates for the job. Make sure you have a solid franchise opportunities website with testimonials. Stark Logic can help. We specialize in Franchise websites and customized marketing strategies. Give us a call at 888.915.6442 for a free analysis of your website and marketing strategy.
4. Build Quality Relationships with the Franchisees. Once your franchisees are in place, they need to have a good relationship with you based on trust and communication so they can rest assured that you are in it for the long term. It’s obvious when a franchisor is only in it for the money – the franchisee will pick up on this attitude and won’t be as motivated as they would if they have a great working relationship with the franchisor.
5. Understand the Role of Franchisor. The franchisee/franchisor relationship hinges on your understanding of your role, which is much different than running a typical business. The franchisor has the operative areas of training the new franchisees, assisting with local marketing efforts based on specific franchise locations, and adding new, successful franchisee candidates. Local marketing is something you cannot overlook. Check out FranLocal, our new software designed specifically for Franchise Systems to help with local marketing – monitoring business reviews, social media and analytics in one easy to use platform to make understanding, and performing your role, much simpler.
Becoming a successful franchisor is really all about planning and timing. It’s such an exciting business opportunity with so much potential for growth. Just consider these challenges and come up with a plan, and you’re well on your way.