How to run a successful franchise

Buying a franchise could be 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 can 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 as much commitment, determination, and hard work as an independent business.

While the franchise concept, system, and location may play an important role, your actions as the franchisee ultimately determine your business’s future.

If you’re interested in how to run a franchise, read on.

What is a franchise?

A franchise is a business arrangement where one party (the franchisor) licenses its brand, systems, and operational model to another party (the franchisee).

In return, the franchisee pays the franchisor an initial fee and ongoing royalties.

This setup allows individuals to run their own business using an established company’s name, products or services, and business processes.

Franchising is often seen as a way to start a business with a higher level of support and a proven concept, but it still involves risk and personal investment. 

Read about the important questions to ask when choosing a franchise.

10 tips on how to run a successful franchise

Adopting the right attitude from day one is arguably the key to running a successful franchise.

Continuing to make smart choices along the way will further increase your business’s viability.

Here are 10 tips that could help.

1. Choose the right franchise

Franchisees whose skills and interests are a good fit for the business may be more likely to find satisfaction and achieve better outcomes.

Choosing a franchise with care could therefore make a big difference to your overall experience and long-term prospects.

It might help to focus on something you enjoy.

For example, you might choose a child-related business if you enjoy working with children, or an IT franchise if you’re passionate about computers.

In addition, choosing a franchise that matches your skill set could improve your chances of success.

Consider whether you would rather work alone or with others, and if you enjoy customer service and managing employees. 

For more guidance, see our free guide to choosing the best franchise for you.

2. Understand the franchise agreement

The franchise agreement is a legal contract between you and the franchisor.

It sets out the rights and responsibilities of both parties, and it defines the terms under which you’re allowed to operate the franchise.

Before signing anything, it could be a good idea to have the agreement reviewed by a solicitor with experience in franchising.

They could help you understand the legal language, spot any potential red flags, and explain what the clauses might mean for you in practical terms.

You might want to pay close attention to fees, territory, renewal terms, exit conditions, and what happens if things don’t go as planned.

Understanding the agreement fully before you commit could prevent a great deal of difficulty later on.

3. Follow the franchise system

Buying into a franchise means adopting another person’s proven business model.

Your franchise’s success may depend on a by-the-book execution of this tried and trusted system and your willingness to adhere to the franchise agreement.

Failure to do this could lead to confusion and inconsistency.

It could also jeopardise your franchise’s success, potentially resulting in the termination of the agreement and the loss of your franchise.

Reading the operations manuals thoroughly and attending all training sessions provided could be a good idea.

This way, you’ll be able to understand the franchise system and its requirements fully.

4. Have a business plan 

Following a franchisor’s rules is important, but a comprehensive business plan is still vital as with any other business.

A solid business plan gives you a clear roadmap and helps you track your progress and financial performance over time.

Your plan might include forecasts, marketing strategies, customer profiles, and an overview of the operational costs involved.

To help write your business plan, download our free business plan template.

It could also be an important tool when applying for finance or presenting your case to lenders, especially if you’re just starting your business journey. 

See our guide to franchise funding.

5. Take advantage of franchisor support

Take full advantage of the ongoing support offered by your franchisor.

Franchisors typically offer a range of support tools, and making the most of these could help you avoid common mistakes and build your confidence.

This support might include initial and ongoing training, conferences, mentoring opportunities with franchise consultants, and access to a network of experienced franchisees.

If your franchisor offers promotional materials, videos, online resources or one-on-one coaching, it may be worth using them.

Getting to know other franchise owners could also be helpful, as they can offer valuable access to shared experiences, fresh ideas, and tips for running your own business.

6. Build a strong relationship with your franchisor

Maintaining a positive relationship with your franchisor could be very important.

It could contribute to smoother operations and a better overall experience.

Keeping up regular communication, submitting reports on time, and responding to updates or changes in company strategy could show that you’re engaged and reliable.

Communication works both ways, and many franchisors welcome ideas from their franchisees.

A positive relationship with your franchisor will help when your contract is up for renewal.

It may also open up new opportunities; you could be considered first for expansion opportunities, new products, or access to better premises.

7. Have sufficient funding

A lack of funding can be a common problem for many new business owners, and franchisees are no exception.

For example, many novice owners underestimate set-up and operating costs.

Very few franchises make a profit in their first year, so having cash reserves to cover living costs and serve as a safety cushion is important.

It may also help to speak with lenders who have experience working with franchise businesses.

These lenders often better understand the model and may offer more flexible terms.

You’ll need to provide a business plan with profit projections and have a full breakdown of the costs involved. 

To help with initial costs, you might consider a Start Up Loan, a government-backed scheme offering up to £25,000 at a fixed interest rate of 6%, plus 12 months of free mentoring.

8. Get to know your local market

Even with a strong brand behind you, understanding your market and specific customer base could significantly contribute to your success.

Consider thoroughly researching your target market, your competitors, and customer preferences.

If you’re running a business from a physical location, your local customers may respond better to particular types of promotions or pricing strategies than others, so tailoring your approach could help you build a stronger business.

Engaging with your community through sponsorships, partnerships, and events could boost your franchise’s awareness and encourage customer loyalty. 

Find out more about promoting your business locally.

9. Hire and manage employees carefully

Your employees could significantly influence how your business is perceived and how well it runs. 

You might find it helpful to invest time in hiring the right people and giving them comprehensive training, particularly around customer service and brand values. 

Clear expectations, regular feedback, and a supportive workplace culture could help improve staff retention and overall team performance.

Some franchisors may have specific hiring guidelines, which help you adhere to brand and legal requirements.

10. Keep learning and adapting

Staying open to new ideas for your franchise could give you a competitive edge in your market.

Ongoing learning by keeping up with industry news and market trends, joining professional associations, or analysing customer feedback can also be beneficial.

Plus, working on everyday things such as better time management, clearer communication with your employees, or making daily tasks more efficient could help your business succeed.

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