Become a top performing business franchise owner with our top tips for ensuring your franchise is a sure-fire success.
Buying a franchise is a great way to get into business for yourself. With the backing and support of a parent company and the ability to use their trademarks and systems, it’s easy to see why new franchises have a higher success rate than traditional business start-ups.
However, simply buying into a franchise isn’t a guarantee of financial success. Running a franchise involves just as much commitment, determination and hard work as an independent business. While the franchise concept, system and location can play an important role, ultimately it’s your actions as the franchisee that determines the success or failure of your business.
The key to running a successful franchise is adopting the right attitude from day one. Continuing to make smart choices along the way will further increase the chance of your franchise’s viability. Here are six ways to ensure franchise success.
Choose the right franchise
Franchisees whose skills and interests are a good fit for the business are usually more successful than those purely tempted by the financial opportunity. Choose your franchise with care. Ensure it focuses on something you enjoy, for example a child-related business if you enjoy working with children, or a IT franchise if you’re passionate about computers. In addition, choosing a franchise that matches your skill set will improve your chances of success. Consider whether you’d rather work alone or with others, and if you enjoy interacting with customers and managing staff. Read our free guide to choosing the best franchise for you.
Follow the franchise system
Buying into a franchise means adopting another person’s proven business model. Your franchise’s success depends on a by-the-book execution this tried and trusted system and your willingness to adhere to the franchise agreement. Failure to do this will jeopardise your franchise’s success, potentially resulting the termination of the agreement and the loss of your franchise. Read the operations manuals thoroughly and attend all the training offered by the franchisor, so that you understand the franchise system and all its requirements completely.
Have a business plan
Following a franchisor’s rules is important, but it’s still vital to have a comprehensive business plan as with any other business. You need a clear roadmap and a way to monitor the performance of your business. A business plan is also essential when raising finance for your franchise. For tips on franchise loans, see our guide to franchise funding.
Take advantage of franchisor support
Take full advantage of the ongoing support offered by your parent company. Attend training sessions and conferences, sign up for mentoring with franchise consultants, and watch company DVDs and online training videos if available. Get to know other franchise owners, as this offers valuable access to shared experiences, fresh ideas and tips for running your own business.
Be friendly with your franchisor
Maintaining a good relationship with your franchisor is very important. Keep in regular contact, complete reports on time and act promptly on new directives. Communication works both ways and many franchisors welcome ideas from their franchisees. A positive relationship with your parent company will help when your contract is up for renewal – and it may open up new opportunities such as being offered the first option on new premises or the latest stock.
Have sufficient funding
Lack of funding can be a death knell for any business, and many novice franchise owners underestimate set-up and operating costs. The reality is that very few franchises make money in their first year, so it’s vital to have cash reserves to cover your living costs and to serve as a cushion for emergencies. When it comes to funding, look for a lender with a specialist franchise team. Loan amounts will typically depend on how well-established the franchise is, and the term length. You’ll need to provide a business plan with profit projections and have a full breakdown of the costs involved including the likely working capital you’ll need.