There are many successful franchises, but just as with any business, they take hard work and dedication to become profitable. Whilst it’s true that franchising allows you to operate under an established brand and have a comprehensive support structure in place, it doesn’t always guarantee success. We now take a further look at the advantages and disadvantages of starting a franchise so you can be sure that it’s the right decision for you.
Advantages of starting a franchise
Franchisees can benefit from extensive training programmes and ongoing support to make sure they are confident and up to date with the latest and most efficient business system processes. Training generally covers things like managing employees, increasing sales and developing the business.
Operate under an established brand that is already well known
The business concept and operational processes have already been tried and tested and proven successful, so the start-up process is generally less stressful and risky. If the franchise already has a number of successful franchise locations, this proves how well the business model replicates in different areas.
If the brand is already known and respected in other areas, it is generally considered that less work and money will have to be put into establishing and building the brand (because it has already been done). There should already be an existing customer base that is loyal to the brand. Rather than having to increase brand recognition on a national level, you can focus on getting word out in your local area.
Disadvantages of starting a franchise
Your reputation can be impacted by other franchisees
As we’ve established, one of the main benefits of franchising is that the brand of the business can entice customers. But with this is the drawback that, if another franchisee does something negative, it could damage the reputation of the whole brand. This could, in turn, have a knock-on effect on the success and profitability of your franchise location.
However, if you do enough research into the franchise opportunity, prepare for the interview properly and speak to existing franchisees, you should get more of an idea of the likelihood of this happening.
Not in complete control
In comparison to an independent start-up, when running a franchise, you’ll have much less control over how the business is run. This will have already been laid out by the franchisor in the franchise agreement. Despite not being able to have much creative control, what has been decided by the franchisor has already proven successful. Make sure this is the sort of business you want to run before investing so you don’t have any regrets.
To find out about some more advantages and disadvantages, click here.
So, you’ve decided that you’d like your next business move to be starting a franchise. Here, we share five things that franchisees can do to ensure that they succeed in running their own lucrative business.
How to succeed as a franchisee
1. Choose the right franchise
This may seem obvious, but it’s not always straightforward to find the right franchise model for you. It can be a tough decision to make and one that will impact your ability to succeed once you’ve become a franchisee. So, how do you choose? To find the right franchise, potential franchisees should consider the following:
- Understand your personality – Before you consider anything else, you should complete a self-assessment to understand your strengths and weaknesses. This will not only help you realise whether you have the correct personality traits to run a profitable business, but will allow you to choose the right franchise model based on your skills and talents.
- Examine disclosure documents – Make sure you review and understand the franchise disclosure document (FDD). As well as detailing the investment costs and projected earnings, it will also contain information about the level of support and training that the franchisor will provide.
- Speak to existing franchisees – Good franchisors will encourage you to speak to existing franchisees before you become a franchisee yourself. This will allow to you to validate some of the claims that the franchisor has made in the FDD, including projected earnings and the amount of time it takes to break even.
When you’ve considered the above, check that the franchise opportunity is aligned with your personal goals. Everyone has different motivations for wanting to become a franchisee, and there are many different franchise opportunities available to help you achieve your goals.
>> Read more:
- Starting a Franchise: Top 5 Things You Must Do
- Top 10 Mistakes To Avoid When Starting A Franchise
- Top 10 Signs That You’re Ready to Start Your Own Franchise
- A Beginner’s Guide to Franchising
- Conquer your fears and start a franchise
- Five excuses for not starting a franchise
2. Take advantage of the training on offer
One of the main reasons that entrepreneurs buy into the franchise model is the fact that it has a proven business system. This system should include an effective and comprehensive training programme.
Why is training important?
Attending the training should be a top priority for franchisees wishing to succeed. The benefits of a quality training programme include the know-how to run your business smoothly and successfully, the ability to overcome challenges, awareness of marketing and sales techniques, and how to improve profitability.
Benefits for the franchisor
Of course, there are also benefits for franchisors that choose quality over quantity when it comes to franchisee training. They’ll be rewarded with more capable, productive and profitable franchisees.
Learn as much as possible from franchisor
As well as the formal training opportunities that you should take advantage of, you must also be willing to learn from your franchisor. They will have worked hard to perfect their franchise model and have developed the business after learning from their mistakes.
…including from their mistakes
Part of the attraction of franchising is that you don’t have to make the same mistakes that your franchisor did. So, be willing to learn from them and increase your chances of success. Even if you’re experienced in business ownership or the industry that you’re now a franchisee in, this all should be erased from your memory so that the franchisor can teach you their way of operating the business.
3. Be a leader
You’re bound to come across challenges when you start any business, and a franchise is no different. As the franchisee, the buck stops with you. Problems should not be ignored or left for anyone else to deal with. This ability to lead, even through difficult times, will inspire your employees and gain the trust of your customers.
Act as a role model
Always lead by example. Take on any task willingly and with an enthusiastic attitude, which will create the same mindset in your employees. This will become key as you grow your franchise and your involvement changes from a less hands-on role in the business to one where you assume the position of leader for your employees.
Spend time investing in your employees by sharing your knowledge and experiences and helping them to shine. Provide constructive feedback on performance so that your team can improve, and praise them when they get things right. It doesn’t matter how big or small your business is, your leadership will always have a substantial influence on your franchise.
4. Be a great employer
Your employees play a massive part in the success of your franchise, so when you find good ones, you want to make sure that you keep hold of them. This is more than simply paying them a good wage; it extends to giving them more than just money.
Being able to recruit and retain quality employees takes a number of skills. You need to be a good listener, encourage them to develop and improve themselves and empower them to achieve their goals.
Listen to your employees
Ultimately, your employees are the face of your franchise, who protect your brand, your investment and your customers. They’ll probably understand many parts of your business more than you do, so listen to their ideas and concerns and always ask for their involvement when making key decisions.
If your team are not satisfied and fulfilled in their job, this will be apparent to your customers, which doesn’t make for a successful and profitable franchise.
5. Conform to the rules
Successful franchises have a tried and tested business model that is replicated by all franchisees to maximise success. If you also want to succeed, you’ll need to follow the rules too.
Don't feel the need to innovate too much. Resist the urge to reinvent the wheel. If the franchisor’s system works, then making unnecessary changes may impact on your ability to be a successful franchisee.
If you have difficulty adhering to rules but have strong ideas about how you want to run a business, then you may want to reconsider whether a franchise business opportunity is the right one for you.
Becky Martin, Point Franchise ©