Developing Your Franchise Business
When you consider the most successful franchises in the UK, you’d be right to think about brand giants such as McDonald’s, KFC and Wimpy. But what is it that makes them so successful? Well, it’s not just their size and global appeal. It’s also due to the length of time that they’ve had a presence in the UK.
Being firm favourites on high streets up and down the country since the 1960’s, these franchises have built up a reputation for offering consistently good fast food. They have developed a loyal customer base who have come to love and trust them.
If franchising is a marathon and not a sprint, then how do you create a franchise system that will last the test of time? Let's find out.
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How to plan your franchise business
Before you embark on a 26.2-mile run, it pays to be prepared. The same is true when you're creating a franchise system. The key to your success as a franchisor is to invest time and effort in to getting the basics right and then building from there. After all, you can’t run until you can walk.
Create a business plan
Before you commit to any investment, it’s important to make sure that the numbers can add up. You need to develop a full business plan that can help you to stay on the right track during your franchise journey and attract the attention of investors.
A good business plan should anticipate the challenges of the industry you’re entering and how you’re going to overcome them. That means it needs to cover all aspects of your business, including:
1) What sets you apart from the competition. The first rule of business school is that every business needs to have a unique selling point. You need to give customers a good reason to ditch your competitors and come to you instead.
It may be that your prices are cheaper, that you offer a more personal service or that your products are of a higher quality. Regardless of the industry that you’re entering, your business needs to have something special if it’s going to grow into a franchise. Without that spark, franchisees aren’t going to be willing to invest in your business in the future.
2) The state of the industry. No investor is going to be interested in putting their hard earned cash into a flatlining industry. You need persuade them that the market is ripe for returns and can support a successful business venture.
A business plan is your chance to establish your niche. There and then, you can identify the gap in the market that you intend to target. Investors need to be excited by your proposition and believe that you are capable of shaking up the market.
3) Profit projections. There is nothing more persuasive than good numbers. Lenders and franchise partners want to know that they are going make a successful yield on their investment. By projecting your annual earnings, all investors in your business can learn what’s in it for them.
Of course, these numbers need to be accurate as possible. They need to account for all potential costs, including wages, stock, premises and insurance. Misleading investors with inaccurate profit projections can result in your business quickly being left out to dry.
Write an operations manual
It's essential that you have sound systems and processes in place that franchisees can duplicate. For this to happen successfully, you’ll need to document how your business operates in the form of an operations manual. This will then be used to train new franchisees and become the ‘go to’ handbook for the business.
The valuable document should cover everything. Some topics that must be included are:
- Staff management
- Sales strategy
- Customer service
But this isn’t the be all and end all of a good operations manual. It should include detail about every element of the franchise.
It pays to spend time making the operations manual as understandable and accessible as possible. Your efforts will be rewarded when your franchisees can depend on the document to run their business without relying on constant guidance directly from you.
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How to develop your franchise business
With the franchise system in place, it's time to get going. Like a marathon, your franchise may seem easy at the beginning, but as the miles rack up and the legs get tired, you'll need a good team around you. Just like supportive running buddies, the relationship between franchisor and franchisee is best when you’re working together.
Recruit the right talent
You have to be selective when recruiting franchisees. Your business can’t be successful without the support of great people. Here are some things to look out for during the interview stage:
- The right values and ambitions
- Relevant skills
For your franchise to perform well and have longevity, you need franchisees who are willing to follow the rules. Franchises thrive on consistency and uniformity, so you need to also bear this in mind when interviewing franchisee candidates.
It’s also essential that franchisees fit the culture of your franchise. You can offer all the support you want but if your franchisees don’t represent what your brand stands for there may be issues further down the line.
Provide the right training
Once you’ve headhunted some franchise partners, you need teach them the ropes. Delivering an intensive training programme can help to break them in and pre-empt any future mistakes that can damage your business.
There are a number of highly successful franchises here on our network who are planning for the future with franchisee training initiatives. One of these is Esquires Coffee, which assists each new franchisee in site selection, store design, lease procurement, marketing and a 24/7 support service.
- Technician recruitment
- Business management systems
- Building brand awareness
Develop a franchise ‘family’
When you decide to franchise your business, chances are you chose to do so because it was a great way to expand while making a profit. But your desire to become one of the most profitable franchises should not come at the expense of your franchisees.
Just as you should help to boost the morale of other runners around you when they've hit the dreaded wall, so you should make sure that decisions you make as a franchisor don’t negatively impact the earning potential of your franchisees. Franchisees must be able to make a profit. This is non-negotiable for the ongoing success of your franchise.
There are a number of good reasons why looking after your franchisees is good for your business. Let’s have a look at them:
- It can encourage franchisees to expand into new territories
- They can help you to recruit more franchise partners
- It encourages a culture of collaboration
All of these things combine to create the right conditions for your business to thrive. With a happy team of franchise partners, everybody involved in your venture can capitalise on your mutual interests and make healthy gains.
How to lead a franchise business
Just like a pacemaker in a long race, a franchisor needs to know their industry well. They also need to maintain a steady speed and a smile so that franchisees feel that you’ve got things covered when times get tough.
Managing your franchisees
As a leader, your franchisees will turn to you in difficult times to make quick and logical decisions. The trust that is developed between franchisor and franchisee relies on you proving that you can deliver on your promises and that you’re dependable, responsible and honest. Leave no doubt that you’re the right person to lead your franchise through any challenge it’s faced with.
Give your franchisees freedom
Your ability to lead needs to be balanced with giving your franchisees enough autonomy that they can make the right decisions for their franchise.
While it's important for franchisees to maintain consistency, you need to consider the long-term implications. If strong performing franchisees can have an element of control over how their franchises are run, they'll feel more satisfied and fulfilled in their role. This will most likely lead to them wanting to renew their franchise agreement at the end of the term which is the best outcome for you and your franchise.
Like a marathon runner, franchisors need to put in the effort to succeed. You need a good team around you who you always communicate and plan with to make sure things stay on track. You should endeavour to lead from the front but cross the finishing line together.
James Muddimer , Point Franchise ©
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