The 5 Keys to Franchise Success

The 5 Keys to Franchise Success by Neil Burnard

Like any other business, reaching franchise success takes hard work, determination, and talent. It requires that you educate yourself on the numerous mistakes many franchisees have made in the past, so you don’t repeat them. It also requires things like adopting the right working habits, having the right attitude with the people surrounding you, setting up the right team, making the correct financial decisions, etc. The list of skills you will need to reach success can get overwhelming, but don’t stress out. I’ve compiled a list of the top five key factors you will undoubtedly need if you want to become a successful franchisee.

The Desire to Learn

The first step towards franchise success is truly understanding your franchise inside and out. While one of the huge benefits of buying into a franchise is the fact that you are handed a proven business model (meaning you don’t have to build one from the ground up), you still have to take the time to master the systems in place. You need to thoroughly understand your franchise agreement, all aspects of day-to-day operations, and how to enhance business while preserving the brand and your investment. The more ready you are to learn, the better able you will be to make your franchise as successful as possible.

Understanding your franchise will be an ongoing process. Agreements may be amended, managing positions may change, etc. One of the best way to stay current is to cultivate and preserve all communication with your franchisor. You should also communicate with your fellow franchisees because at the end of they day you are all representing the same brand and can learn a lot from one another.

Strong Work Ethic

When you’re part of a franchise, you’re selling the same products/services as every other franchise, so what’s going to make you stand out? Your work ethic.

Demonstrate your ability to get things done while minimizing costs and maximizing sales at your location. The hard work you put into getting your individual location off the ground will pay off for years to come.

Never assume that just because you are a franchisee of an established brand that money will come easy. You’re a business owner which means you’re responsible for not only yourself but your employees success. A little bit of your heart and soul should be invested in the business. Implement a solid work ethic that will naturally push the business and those around you forward.

Realistic Financials

As a franchisee, a major part of your job is to be on top of the finances. But before you even become an owner, you should take the time to analyze every aspect of what your initial investment will require.

Calculate how much you can realistically invest and how much you are willing to risk. Don’t let emotions and excitement get in the way. This has to be a completely rational decision. If you aren’t able to provide enough working capital to stay open, you might as well flush your money down the toilet right now. And don’t forget to consult your attorney and financial advisor before committing to anything.

As the company gets up and running, you’ll need approach your financials with the same stark objectivity. The the better grasp you have of your bank account and the actual cost of running your business, the better business decisions you will be able to make down the line.

A Solid Team

You might be the greatest business person in the world, but you’re also human which means you can’t do everything by yourself. In order to take your franchise to the next level, you will need the right team.

Don’t rush through this process. Recruit the best candidates, engage with them on a personal level, and make them feel valued. Keep in mind that these people can leave any time they want, so it’s important to be a good boss. As you build your team, you also will have to sustain and continuously engage them. Don’t allow employees to get stuck doing boring work, be fair, challenge them (in a healthy and acceptable manner, of course), and provide salary increases for a job well done, etc.

And remember, just because you’ve hired a great team doesn’t mean they won’t need franchising training. Take the time to train and develop your employees. With the right attention, they will not only get better at their jobs, but they will feel important to the business.

The Right Attitude

As a franchise owner, your team will ultimately look to you as their prime example. If you have a negative attitude, don’t be surprised if your employees catch it. And worse, don’t be surprised if that negative attitude eventually destroys your business.

Make it a conscious effort to adopt the right attitude both in and out of the office. While you’re in the office, be enthusiastic about business and your employees progress. Enthusiasm is contagious, and yours will make your employees excited to put in the work.

You’ll also want to implement the right attitude when you’re providing customer service. Letting your customers know they come first will be invaluable for your franchise to succeed.

Lastly, take time for yourself and your family. Spending quality time with the people you love will revitalize you. You will come back more determined and with a more positive outlook, hence continue to push your franchise business forward.

Final Thoughts

There you have it: five key factors that will guide you to franchise success. Keep in mind that a lot of this will depend on your commitment and mentality towards the business. If you truly want to see it flourish, you will find it in you to achieve your goals.

How to Identify the Right Franchise Brand for You

How to Identify the Right Franchise Brand for YouWhen looking to buy a franchise, it’s important to properly educate yourself about every aspect of the business so that you can feel certain you’re entering into a brand that is both appropriate for you and reputable. This task can seem daunting when facing 100’s if not 1000’s of franchise options, and without enough information it can be all-to-easy to end up with a raw deal. However, with the right strategy and preparation, you can make informed decisions that will benefit you and your business today and down the line. Here are some tips on how to identify the right franchise opportunity for you.


Getting started

Before you even begin looking at what’s out there, educate yourself about the current landscape of franchising from a credible source, such as the British Franchise Association (BFA.) Whether you’re new to the concept or just need updates on recent legal changes and industry trends, BFA offers seminars and educational tools that can give you in-depth information, insights, and industry knowledge to help you make your decisions.


Speaking to prospects

An ethical franchisor should have no problem being transparent with you about the development of their business and the challenges they have both overcome and currently face. It’s perfectly normal for a franchisor to ask you to sign a confidentiality agreement first to protect crucial information about the company, and you should feel free (and encouraged) to get a legal advisor to evaluate the agreement before signing.

Things to look out for:

  1. Anyone telling you that their franchise is perfect, and they have made no mistakes
  2. Anyone telling you they can make you rich overnight

A few questions to keep in mind:

  1. How long have you been in franchising?
  2. How many franchised businesses are you running at the moment?
  3. What costs are associated with the franchise, including both opportunity cost and additional capital costs incurred by the franchisees?
  4. What’s included in the cost, and what kind of costs are franchisees expected to incur?
  5. What does their training and development program look like?
  6. How many franchisees have failed and why?
  7. How many franchises have opened in the past 12 months?
  8. What systems do you have for keeping franchisees in touch with you and each other?


Speaking to franchisees

In addition to speaking to franchisors, you should speak directly to the franchisees of the brand, as they can verify what the franchisor has told you as well as give you a better picture of the day-to-day experience of an individual location.

The franchisor should provide you with a complete list of all their franchisees and allow you to choose which ones you want to speak to. If they don’t, this could be a red flag.

When choosing who to speak with, aim for as wide a variety as possible to get a more complete picture. Choose both top and bottom performers. Choose some who have just started and some who have been with the franchise for a long time. To understand the full cycle of how the business is run, you need to look into performance at every point.

A few questions to keep in mind:

  1. Why did you choose this franchise?
  2. What support did you receive when you first got started?
  3. Have you received continued support? How so?
  4. How involved is the franchisor at this point? Does he/she visit often?
  5. Did the outcome of your business meet the expectations that were set for you when you initially got involved?
  6. If you had the chance, would you do it all over again?

If the franchisor and franchisee agree to it, you may also want to shadow a franchisee for a day to see the business in action for yourself.


Get some expert advice

There are many financial and legal aspects that you’ll need an expert for. Projections can be discussed with a dedicated franchise department at one of the several major banks that support franchising. You will also need legal advice from a solicitor who specializes in franchising. If you’re not sure who to look to for help, check for specialists who have been accredited by the BFA.


Making the final decision

Once you feel you have a firm grasp of the operational, financial, and legal aspects of the brand, make sure you revisit the most important part of your decision: is it right for you? Something can be a sound business investment and still not be exactly what you’re looking for.

A few questions to keep in mind:

  1. Is the projected outcome of this deal in line with your professional goals?
  2. How does this business fit in with your personal goals?
  3. Does the reality of the business allow you the hours, work-life balance, and flexibility that your personal life requires?


Use everything you’ve learned as a resource for your final decision. Once you know you’re prospect is an ethical, reputable brand with a financially bright future, the final call has to ultimately come from how you feel about it.

Why Franchisors and Franchisees Have Trouble Seeing Eye to Eye

FranchisingBuying a franchise is a great way to acquire an instant customer base, proven business model, and polished operational support. But as many franchise owners soon discover, this great purchase can also come with a downside: disgruntled franchisees.

Life is full of conflict, and the franchise industry is no different. But franchisor/franchisee disputes specifically arise out of the inherent nature of the franchise model. Why? Because franchises motivate each party towards different goals. When it comes down to it, franchisees and franchisors just want different things because they make their money in different ways. This obviously creates a vulnerable spot in the franchisor/franchisee relationship, where conflict is more likely to arise.

So how do we fix it? There will probably never be a way of eliminating all franchisor/franchisee conflict entirely (wouldn’t that be a dream?), but recognizing and understanding the factors at play is the best way to avoid either creating or escalating disagreements between parties, especially to the point where litigation becomes necessary.

To understand where this inherent conflict comes from, let’s start with the basics of what franchising is: franchising is a business arrangement in which one party (the franchisor) rents a business model and brand to another party (the franchisee), who uses it to sell products/services to a customer base. The amount the franchisee pays is usually calculated as a percentage of their gross sales, meaning the franchisors profits increase with franchisee sales. This means a franchisors priorities and day-to-day concerns are usually focused on adopting policies and enacting strategic business decisions that maximize sales at each franchisee location.

Franchisees, however, make their money a little differently. They make money by generating revenue that exceed their costs, which means a franchisee is going to prioritize policies and pricing that maximize profits at their locations.

This is the part where conflict arises: policies that maximize outlet-level sales aren’t the ones that maximize outlet-level profits.

Need an example? Let’s look at buy-one-get-one-free discounts. Successful buy-one-get-one-free promotions bring in more customers and boost sales. This is great for the franchisor whose earnings are linked to outlet-level sales. But for the franchisee, this successful promotion doesn’t necessary boost their profits. If the size of the average customer purchase doesn’t increase, the franchisee could actually be worse off. The buy-one-get-one-free promotion raises the franchisee’s costs (by the amount of the free item) while potentially (and often in reality) failing to boost revenues.

These kinds of conflicts aren’t rooted in ill will or pettiness. It stems from the basic structure of the business model. What’s good for the franchisor is not necessarily good for the franchisee. If enough money is compromised, the end result could very well be a lawsuit.

Here’s a real world example: a few years ago Burger King wanted its franchisees to stay open late to sell more fast food to those seeking it at off hours. If franchisees sell more food due to being open during off hours, Burger King brings in more royalties, boosting its bottom line. This was a great plan from the franchisors point of view, but staying open late ultimately caused the franchisees to lose money. They had to pay employees for the additional hours even though their late-hour revenues were less than those wages. Its franchisees ended up in court over the disagreement.

Another common point of contention is the opening of new locations. When an additional location is opened up, often times it takes away from sales at an existing outlet. Franchisors are still better off because the new establishment inevitably increases system-wide sales, but this doesn’t help the franchisee that was around first. Their cost of operation remains the same, and they end up with lower sales.

It’s important for both franchisors and franchisees to be aware of how the other party is motivated in order to create a more understanding and effective dialogue. When they work together from a place of mutual respect and understanding, they can enact policies and business strategies that are involve more compromise and mutual benefit. One party may benefit more from a particular policy, promotion, or opening, but working together can insure minimal risk to the other, and create a lasting positive relationship for all.