9 Effective Cost Cutting Strategies for Franchisors

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In today’s economic climate, it’s more important than ever that business owners can keep costs down. To help ensure your business survives and thrives during this period and long into the future, we’ve provided nine cost cutting strategies for franchisors.


The COVID-19 crisis has presented a magnitude of problems for individuals and business owners across the globe. In order to make sure your business comes out on top in times of economic uncertainty like we are currently facing and operates efficiently all year round, you need to find ways to cut costs. We now share some effective cost cutting tips that can help you keep your business afloat without compromising on the quality of your products or service.

1. Review your expenses

Our first cost cutting strategy is to examine all of your expenses, even the smallest ones. You can’t be a successful franchisor without keeping track of your expenses, so take a close look at your budget and check that all of your expenses are still necessary. Get rid of those that no longer make the cut. There is so much great accounting software at your fingertips, including Quickbooks and Xero.

2. Analyse your stock intake

Determine which of your products aren’t selling well at particular franchise locations. Keep in regular contact with franchisees and study your sales figures in depth. Are there any trends based on the franchise location? If any products aren’t proving to be popular enough, decrease their production.

If your stock is slow moving, it’s going to result in financial losses, as lots of the time the goods are taking up valuable space and may eventually become unsaleable. Any good franchisor will be doing this anyway, but you might have to be more cut-throat with what stock you reduce or completely cut out in order for the business to see a greater benefit.


3. Change suppliers

Another way you can cut costs is by switching suppliers to try and find a better deal. Or, if you’ve got a good relationship with your suppliers, you could have a frank discussion with them and negotiate a longer term or reduction in prices. You could suggest you’ll make enquiries with their competitors to persuade them. Make sure you also consider the expenses related to logistics and freight as well as the value of the goods. These can significantly put the price up.

4. Reconsider your marketing strategies

In most cases the franchisees will be responsible for advertising their businesses on a local level, but you will be in charge of the nationwide marketing efforts. Traditional marketing methods, for example TV commercials or radio announcements are often very costly. But there has been so much development of innovative, low-cost alternatives that can achieve even better results. With tools like Facebook Ads and Google AdWords, you can advertise your franchise to a targeted audience based on their age group, location and demographic.

5. Have virtual meetings

If the COVID-19 crisis has taught businesses anything, it’s that they can operate successfully remotely, including communicating effectively with video conferencing platforms like Zoom. Even when life has returned completely to ‘normal’, you might want to consider having more virtual meetings with clients, your franchisees and interested candidates.

Of course, there are benefits to meeting up in person, it could mean conversations are more in-depth and you get a better impression of someone’s personality, but in some cases, using the latest technology can help you save on hefty travelling expenses. This might be a particularly successful strategy for follow-up meetings with clients, potential suppliers etc.

6. Limit use of paper and printing

Try to avoid these as much as possible, but when you can’t, print using both sides of the sheet. It’s much more cost-effective and eco-friendly to scan documents and use online sharing tools like Dropbox, Google Drive and OneDrive when sharing resources with your franchisees.

7. Only hire employees when you really need to

Your franchisees are usually responsible for the recruitment of their staff, but you might also have your own team of employees offering franchise support or carrying out admin tasks that you are accountable for. The cost of hiring and training employees soon add up, so only hire an individual if the position is completely essential.

8. Consider terminating employee contracts

This should be a last-case scenario, especially if someone is adding value to your franchise operation. Yet, if you’ve carried out an in-depth analysis and found that having that individual employed is not cost-effective for the business, you might need to let them go. Just make sure that the costs involved with terminating their contract are worth it, including the time it would take a new employee to be trained to their level and how the business would reconfigure to operate successfully in their absence.


9. Communicate with franchisees

If your franchise brand is struggling or is in desperate need of cost cutting measures, make sure you communicate this effectively with your franchisees and employees. At the end of the day, it is the efforts of your entire franchise network that make your franchise brand a success. Even little things like your Head Office team making sure to always switch off devices when not using them and digitising documents where possible can make a bigger difference than you’d think. You all share a common goal so everyone should fully embrace any cost cutting strategies that you outline.

Implement these cost cutting strategies for long-term business success

You should always be looking for ways to evaluate your business and identify areas where you can save money. At the moment, every penny counts, so even something that seems insignificant can have a big impact on your business’s success. By implementing just one of these tips, you should be able to get your costs down, increase profits and improve efficiency.

You might also be interested in our other articles for franchisors.

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