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What makes a franchise successful?

Written by: Diarmuid Kieran

Article Overview: The factors that influence a franchise's chances of success

What makes a franchise successful?

Both franchisers and franchisees need to have a number of aspects in place if they are to achieve their goals.

Companies looking to branch out into franchising must ensure that they have a strong team in place with some of them having had experience in the franchising industry.

This will enable the franchiser to be able to structure and market itself in a way to quickly attract franchisees to the business.

As many potential franchisees carry out research of the company, it is essential for franchisers to have a secure financial base and a record of spending money to help develop parts of the business that need improving.

Substantial funds are required to provide the training programmes, support systems and in some cases much of the stock that franchisees need.

Not only will this investment make it more likely that the best people wanting to become franchisees will choose to work for the company, it will help them to make a good job of their own franchise.

Once in operation, the reputation of the franchiser will be vital for it being able to continue to attract good franchisees.

It should be in contact with franchisees at regular intervals, ideally through a structured franchisee advisory committee, to ensure any problems are dealt with quickly and that the business structure is being properly carried out.

In addition, there should be regional and national meetings so that franchisees can network with each other and any new franchise developments can be explained to one large group, instead of having to do it individually.

The franchiser must ensure that it complies with all regulations, in particular concerning the sale of a franchise to another person, as departing franchisees should know exactly what they can and cannot do and new franchisees should be aware of everything in the franchise agreement.

If all this is in place, then franchisees will have a great platform to succeed. However, there are no guarantees and they must make sure they are able to carry out all necessary duties.

They must also be in contact with the franchiser on a regular basis to discuss the franchise's development and problem issues.

The franchise costs must be constantly checked and administration needs to be up-to-date so that franchisees know how much extra stock and staff they can handle at a certain time.

Similarly, as franchisees are in charge, they need to be responsible for having a good daily structure in place to ensure time is not wasted, which includes planning ahead for new developments and seasonal factors.

They also need to be able to market the business effectively, through local publications, flyers and talking to people face-to-face, with the results used effectively to change things in order to attract more customers.

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Re: 40 cents per dollar is spent in a franchised business - Hi Kevin and John: I definitely agree that it's a personal choice, but what makes it hard is that it is in essence a business decision as well. the mixture of the two and the weighing of each aspect makes it a difficult choice for me to understand. John, what kind of things go into the due diligence part? i think there must be more beyond understanding the nature of each franchise...such as the fit of the franchise with respect to location etc. owning a no-frill pizza franchise in a ritzy lifestyle-conscious neighborhood might not be as good as say a healthy juice-bar type of franchise etc. any market research help available out there?
Hello I am a franchise expert - Hello, I recruit franchise owners for successful franchise concepts based in the USA. Many of my franchises are looking to expand north to Canada in all major centers. I enjoy networking and answering questions about franchising. If anyone is interested in the franchise world or looking to buy a franchise then contact me. I have a wealth of information and like to help. Thanks for your time. Michael Somer
Each Franchise is different! - No two franchises are alike. Build the fee structure that makes most sense for all parties involved, franchisor, franchisee, and vendors. Yes vendors, some franchises take the the % that vendors (for example coke and pepsi) give them and contribute those to the advertising fund. Many franchises don't manage the advertising fund by themselves but seek franchisees to have a say in how the money is spent, some times thru regional franchisee groups. Speak to a few of the franchise development companies (franchise mills) be careful for the fill in the blank, one size fits all franchise development companies, those companies seldom produce successful franchise systems.
Re: Are Economic Recessions Good for Franchising? - [quote="RussellWebb":6xh1ztbv]As I understand it, when there are more corporate layoffs you have more workers looking into starting their own business. It makes sense in a backwards sort of way. My first impression is that Franchising would take a hit like everyone else... but the more I look into it: [i:6xh1ztbv]The opposite occurs[/i:6xh1ztbv]. There's a larger pool of very qualified workers that are disenchanted with the corporate world. They are often more than willing to take a bigger risk and seek self-employment, whether it's a franchise or not. In my opinion, there are lots of good opportunities out there, it's just a matter of doing your research and finding a nice fit.[/quote:6xh1ztbv] I agree with Russell. Initially everything looks like its taking a slight to moderate (and in some cases very "moderate") hit. But owning your own business is really (not to be cheesy) what the American Dream is all about - and this can most definitely be done in the cast of a successful franchise business. If you just think of a franchise as a very successful business plan, isn't that a pretty good place to start?
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