Four Key Elements of a Successful Franchise
Have you ever dreamed of quitting your job and starting up your own business? Yes? Well, you’re not alone. According to a study from tech retailer Ebuyer.com, 80% of Brits aspire to be business owners one day.
But these dreams fail to become a reality for many. This is because of the perceived barriers that Brits assume will stop them from becoming the boss. Lack of money was cited as the most significant barrier to starting a business at 67%, followed by fear of failure at 44%, and lack of time at 26%.
Franchising could be the answer.
Each of the barriers that Brits name as being the reasons why they haven’t acted on their dreams of starting their own business could be removed by investing in a franchise.
Unlike starting an independent business from scratch, good franchises offer you the support systems required for a successful business which is included in the investment cost. The skills needed to operate, promote and manage for successful franchises are typically covered off in the initial training programme which you attend when you become a franchisee.
Because you’re investing in a tried and tested franchise system with a proven track record of success, franchising is generally considered less risky than going it alone. You get the benefit of learning from the franchisors’ mistakes making your journey to business ownership a smooth one.
Of course, even if you invest in one of the good franchises, there’s no guarantee that your business will be a success. You’ll still need to work hard and be driven to make the most of your business opportunity.
However, there are four key elements that you should look out for when conducting your due diligence which contributes towards the achievements of successful franchises.
One of the most significant benefits of buying a franchise is the fact that you’re investing in an established brand. This gives you instant access to a customer base that already knows about and wants your products or service. For independent business owners, building up a customer base and encouraging repeat custom can take significant time, effort and money.
When you become part of a well-known franchise brand, you’ll practically have recognition and loyal customers from the minute you sign your franchise contract. This level of brand awareness has a considerable influence on the success you're able to achieve as a franchisee.
The brand reflects your reputation which is why it's so crucial that franchisors protect it. But you have a part to play too. Joining a recognisable brand gives your franchise an element of authority and respect. And the key to maintaining this is through consistency of products and service. The ability for you to follow the franchise system and commit to upholding the uniformity of the brand is critical to your success.
Good franchises will also ensure that you get the training and support you need to operate your business successfully. As well as the initial training programme which will share the skills needed to become a profitable business owner, along with the technical know-how to run the specific franchise, you should also get access to ongoing support.
You should be able to call on your franchisor or their support team at any time if you’re struggling with any aspect of your business. After all, the franchisors’ success depends on your success, so it’s in their best interests to provide you with all the help you need.
When you’re reviewing your franchise contract, make sure that you're happy with the quality and quantity of training and support detailed. If you don't feel that what's being offered is adequate, you may want to contact existing franchisees within the network to discuss the support available. This way you’ll get an honest opinion on whether the franchisor is likely to give you the advice and guidance you need to be a success.
When the franchisor shares the financial performance of the franchise with you, you shouldn't just take their word for it. Make sure that you verify that the revenue and profit forecasts are realistic with other franchisees. If you’re going to make a substantial investment in a franchise you want comfort that you’re going to earn a considerable return.
As well as validating the franchisor’s claims with franchisees, you should also conduct your own analysis along with an accountant that specialises in franchising.
As well as being financially viable, your business needs to have the longevity to be considered one of the successful franchises. When you’re performing your research, look for franchises that have been trading for a while or that have tremendous growth potential. If you want to run your own business to establish long-term financial security, a more mature franchise may be a better choice than a newer, more niche franchise.
Another important consideration when looking for franchise opportunities is whether the products or service being offered will continue to be in demand in the future. It can be difficult to predict future demand effectively without the use of a crystal ball, but there are specific signs you can look out for.
For example, if a franchise depends on just one product that is in trend right now, then you must expect the initial enthusiasm to wear off, therefore reducing customer demand. To avoid this, look for franchises where you can be confident that the products or service will continue to sell over time. Of course, these franchises will still have to innovate to remain relevant in the future, but it will give you a better chance of success than a business that relies on fads.
There will undoubtedly be other factors that affect your success as a franchisee. You’ll also need to consider things such as the terms of the franchise contract, the size of the investment, and the earning potential. However, the four essential elements above will help you determine whether a franchise opportunity is worth pursuing early in your franchising journey.
The Editorial Team, Point Franchise ©
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