Editor’s Note: This blog post was originally published in June 2016 and has been fully updated and improved in July 2023 to be comprehensive and easily understood.
If you’re a franchisee or considering becoming one, you know that to be successful you’ll need a unique set of skills and strategies. It’s not just about following a proven system or relying on a well-known brand name. You also need to understand how to effectively run and grow your specific location.
To help you learn from the best, we reached out to 5 successful franchisors and asked them to share their stories and top tips on how to franchise your business successfully. These franchisors come from a variety of industries and backgrounds, but they all have one thing in common: they’ve built thriving franchise businesses and want to help others do the same.
In this post, we’ll highlight the tips and advice provided by these 5 franchisors, so you can learn from their successes and apply their strategies to your own franchise business. Whether you’re a new franchisee or a seasoned veteran, these tips are sure to provide valuable insights and inspiration for taking your franchise to the next level. So let’s dive in!
Tip #1: Develop and Refine Your System Before Franchising
I’d recommend franchisors not start franchising until they have their system in place, with processes, protocols, and tools that are proven to succeed across the different places where they want to grow.
Allen Fishman, Founder, and Executive Chairman of The Alternative Board
According to Allen Fishman, Founder, and Executive Chairman of The Alternative Board,
When starting a franchise, the initial challenge is bringing on the first few franchisees. Business owners are typically skeptical of new franchises, and rightfully so. To overcome this obstacle, instead of franchising very quickly, I spent 5 years opening different offices in different cities, so we could refine TAB’s system. We developed the tools for each office to succeed in its unique location.
The answer to the question of how to franchise your business is documentation, processes, protocols, and uniform offerings. At TAB, the structure is everything. When we bring on new franchisees, their first 12 months are spent learning our coaching systems via the tight protocol. More flexibility is allowed after the first 12 months, but only after they have a very clear picture of what they’re supposed to be doing (and how they can succeed). Each new board is formed identically and is very process oriented.
Tip #2: Develop a Thorough Monitoring System
“The primary issue franchisors face when starting is developing the systems necessary to effectively monitor franchisees.”
Craig M. Morgan, a franchise attorney at Providence Law
Considering Craig M. Morgan’s stance
Companies lacking adequate systems are unable to monitor the additional units. Issues such as consistency and correct royalty payment soon arise. To turn a small unit company into a multi-unit chain, you need to develop the necessary infrastructure. This is a difficult task that separates successful brands from short-lived ones.
Franchisees should be monitored through a series of processes. Sales data should be reported as near time as possible, daily if not instantly. P&Ls should be reviewed quarterly. Field managers, working for corporate, should visit the individual units routinely, at least once a quarter (this, obviously assuming a brick-and-mortar establishment). In short, the more thorough the monitoring the more likely the success of the individual unit.
Tip #3: Align financial reporting tools between franchisor and franchisee
According to Alan Guinn, Managing Director of The Guinn Consultancy Group, Inc,
Aligning the financial reporting systems of the franchisers and franchisees can improve both parties’ chances of success. It is simpler to compare financial data and find areas for improvement when reporting tools are comparable or fairly similar. This enables candid and open communication between the franchisor and franchisee, improving understanding of one another’s potential and challenges. When there is two-way communication and the books are open, it is simpler to resolve issues before they grow into larger ones.
Tip #4: Invest in a Central Administration Management Software Platform
“One of the main challenges faced by franchisors in the early days is a lack of cash and resources.”
Troy Hazard, Shareholder, and Director of Poolwerx,
To attract franchisees, franchisors need to provide various services such as marketing, field support, system manuals, and induction training. However, these resources can be expensive when no revenue is generated from franchise fees.
One solution is to invest in a central administration management software platform. For example, Poolwerx franchisees are all connected to a central software platform that provides real-time visibility into the business’s performance. It includes sales, stock control, and other important metrics. This allows franchisors to monitor their franchisees more effectively and identify areas for improvement. It helps address issues before they become bigger problems.
Tip #5: Regular Communication and Support with Franchisees are Key to Success
According to Brigida Aversa, Owner of Tiny Hoppers,
Regular communication and support with franchisees are crucial for maintaining the quality of the brand and the franchisee’s investment. Tiny Hoppers schedules weekly meetings with franchise owners to discuss the status of the franchise and any problems they may be facing. Additionally, district managers visit each franchise once a month to provide feedback and ensure that quality standards are being upheld. This level of support and communication not only protects the brand but also ensures that franchisees have the resources and guidance they need to succeed.
Conclusion
If you wanted to know how to franchise your business, these franchisors gave you the answer. After examining their feedback, it is evident that adopting best practices and uniform procedures for all franchisees is crucial for success. To effectively communicate and ensure accuracy, franchisors, and franchisees can utilize specialized franchise administration software. These systems, despite appearing complex, can be simplified to allow for a more efficient focus on running their businesses successfully. Franchise owners can safeguard the prosperity of their franchisees and uphold the caliber of their brand by using these procedures.