Running a successful franchise takes passion, grit, business acumen, and having a vision. Ray Kroc, the founder of McDonald’s, once said, “The quality of a leader is reflected in the standards they set for themselves.” Setting these standards and knowing how to bridge the gap between vision and reality is also a skill unto itself that every franchisor needs to attain a successful franchise business.
You have to put in the groundwork and provide the resources and tools franchisees need to improve performance and better serve customers. Whether you’re ready to open a franchise, or are merely toying with the idea, below are fundamental strategies necessary to acquire a competitive edge.
8 Tips for a Successful Franchise Business
The first step to knowing how to be successful in a franchise business is defining what success means to you in terms of scale. How big do you want your business reach to be? Of course, this can change, but having an idea will help you strategize effectively, as will these tips below.
#1: Love the Product or Service You Offer
Entrepreneurship is filled with peaks and valleys. It’s easy to feel fired up when things are going well, but when they aren’t, you’ll still need the same enthusiasm, if not more. According to the Harvard Business Review, passion is a “key predictor of an entrepreneur’s creativity, persistence, and venture performance.” The more passionate the franchisor is, the more likely they are to succeed.
While it's possible to grow your franchise by having a sole interest in metrics and profit, the energy present when you are passionate and truly believe in what you have to offer will always result in better customer service, and products or services. Passion feeds resilience, and even though it can be tested, it can’t be faked.
#2: Make Sure You Have Starting Capital
Franchising costs vary from business to business. Becoming a successful franchise entails paying for the legal development of a Franchise Disclosure Document and operations manual, as well as a financial statement preparation and filing and registrations fees.
You will also need to invest further capital into a franchise sales website, branding, franchise sales presentations, paid advertising and joining relevant broker organizations to attract new franchisees. Hiring a professional digital marketing agency can alleviate the admin but will cost an additional fee, that while worthwhile, still needs to be budgeted for.
#3: Develop a Plan to Achieve Your Goals
What’s the secret on how to make your franchise successful? A business plan. These detailed documents serve as roadmaps to guide your business journey. Most business plans contain the following:
- Executive summary
- Business overview
- Industry description
- Customer description
- Competitive analysis
- Marketing and sales plan
- Operations management plan
- Financial Plan
- Appendix
Businesses should always meet the evolving needs of their customers and the marketplace. Having a strategic business plan will articulate your milestones and is extremely valuable if you're looking to raise funds from investors and lenders. It helps you get real about your cash flow, appropriately value your business and ensure its products and services are current.
#4 Hire the Right Team
People are the most important aspect of your company. They are responsible for how you operate, how your business presents itself to customers or clients, and ultimately, how successful you are — this goes for your business team and prospective franchisees. Striking a balance between job role competency and company culture when hiring is important, too; there’s no point in employing a competent hire who doesn’t mesh with your company’s values and ethos.
#5: Provide the Right Tools and Support to Your Franchises
What makes a good franchise is an agile yet strong and supportive infrastructure. All franchisees need initial training when they start. Even if they have experience, they’ll still need to learn the ropes of your operating model. Providing ongoing training ensures standards are maintained and benchmarks are met.
Like we mentioned before, becoming a successful franchise relies on a strong team. Hosting regional or system meetings and conventions to impart new information, training, and touch base with franchisees keeps everyone in the business loop and maintains a healthy franchise culture.
Additionally, setting up the digital infrastructure to optimize and standardize business processes streamlines operations and boosts productivity. Franchise management software, like serviceminder.io, for instance, can help franchisees with dynamic lead capture, invoices, and payments. The use of digital tools to track KPIs and boost business growth is increasingly becoming part of the business norm.
#6: Make Sure Your Franchisees Provide Great Customer Service
According to PWC, 59% of people in the U.S. claim they will walk away from a company or product after several bad experiences, and 17% after just one. Customer retention is generally cheaper than acquisition because returning customers are likely to spend more on your product or service. Happy customers recommend others and are more likely to remain loyal.
To grow your franchise, you need to ensure your franchisees are properly trained and implement feedback mechanisms for customers to rate your service. Without constructive feedback, you won’t have the necessary insights to know where or how to improve. Good customer service leaves a lasting impression and encourages people to return.
Quick responses, personalized service, and proactively reaching out to your client base with value-added deals or promotions are all part of good customer service. Providing excellent customer service boosts brand image, and a solid reputation is vital to grow your franchise.
#7: Get Involved in the Community
Donating your time and services to your local community makes them aware of your presence, lets you give back to others and can provide valuable feedback on how to expand your franchise business. Getting to know your community allows you to familiarize yourself with potential customers and better serve them. Some franchises, like Molly Maid’s Ms. Molly Foundation, have even gone as far as to start a non-profit organization to support victims of domestic violence, for example, which helps affect local change.
#8: Connect With Your Business Colleagues
As a franchisor or someone interested in rolling out a franchise package, you will need to flex your networking skills. Networking helps to get a better understanding of competitors and scout potential franchisees who are committed to building your franchise chain. Entrepreneurship can be lonely, so building relationships with a network of people with similar goals can boost morale too.
Networking also offers another avenue to learn how to be successful in a franchise business because you’ll get exposure to the latest trends, innovations, changes, and techniques for restructuring and optimizing business in a dynamic environment. Seasoned franchises will have first-hand knowledge of how to tackle unusual problems not touched on in an owner’s manual.
Many seasoned franchisees have gone through rigorous processes to grow their own franchise portfolio, meaning they have first-hand knowledge of how to tackle unusual challenges. Just as a business becomes successful by hiring the most talented employees, so too can a franchise grow by rubbing shoulders with others in the field and learning from their experience.
Conclusion
A successful franchise owner has an entrepreneurial spirit, the patience to invest time and energy before reaping the rewards, and the agility to adapt as their franchise grows. More than offering a brand and operational business model, a great franchisor should assist franchisees with location selection, financial advice, marketing, and management.
One way to provide support and help franchisees run a successful franchise business is to provide streamlined field management services. serviceminder.io software has the tools franchises need to manage and track their sales cycle. Click here to find out how we can streamline your client management process.