A franchise business is a business in which the owners, or franchisors, sell the rights to their business logo, name, and model to third-party retail outlets, owned by independent, third-party operators, called franchisees.
Franchises are becoming an extremely common way of doing business nowadays.
An initial fee must be paid first for the rights of the business, training, and the equipment required by that particular franchise. Once the business starts to operate, the franchise will generally pay the franchisor an ongoing payment, either on a monthly, quarterly, or annual base, based on franchise operation’s gross sales.
After the contract has been signed, the franchise will open a replica of the franchise business, under the direction of the franchisor. The franchisee will not have as much control over the business as he or she would have over their own business model, but may benefit from investing in an already-established, name brand.
Before building a successful franchise business, you need to understand the biggest challenge in order to overcome it;& to know, when is the right time to franchise your business. Or knowing, whether your business is franchise ready or not.
- Two of the Biggest Challenge in building a franchise business.
1- The Risk
Same as starting a new business, there is always a risk. Because the franchisee owns the business, he or she, to a great extent, determines the success of the venture. The franchisor may have a great program and a respected name, but in the final analysis, much of the risk is in the franchise’s hands.
2- False expectation
Some people buy a franchise hoping to get instant success, perhaps because they see how well other franchises have done. But that achievement did not come without great effort. Franchising, like any other business, requires incredible time, resourcefulness and industry. Potential franchisees should ask the franchisor to be realistic when explaining what is required to operate the business.
- When do you know the need to franchise your business?
The first typical question that arises is, “Is your business franchise ready?” And this is a huge indicator that you should at least consider looking into franchising your business. When people are inquiring about whether your business is a franchise, it is often because they are interested in owning and investing themselves. If you have been asked this question more than once, you know that there is some interest in franchising your business.
The brand that you spent years establishing can potentially become a trusted, recognizable one that people will know, with people behind it who are dedicated to making the brand the best that it can be.
Now that you know, your business is franchise ready. Let’s get started with the top Eight Points to build successful Franchise Business.
1- Franchise Development
How can you franchise your business if you don’t have the infrastructure for the same; for the transition of a single business to the franchise? So, this is the very first thing you need to keep in mind before you go for the transition. Understand the initial investment required.
2- Choose multiple company locations
A company having multiple-location can turn out to be the most successful franchise for businesses. These companies have more experience, capital, and human resources. A single location company often lacks the resources needed to launch and build a successful franchise network.
3- Abundant Working Capital
Lack of sufficient capital leads to most of the startups fail. Do some research beforehand so that you know how much working capital you may require. Forecast how much cash flow you may require for easy running of your business. It’s important to gather key data and information on the existing business operation and to benchmark key metrics to existing franchise systems comparable to the company operation.
4- Take a risk & aspire to be different
Taking risks is a feature inherent to any entrepreneur. Still, it is always good to keep a note and remind ourselves to create value in everything you perform by thinking out of the box. Entrepreneurs have fears too, but it is crucial to believe in the vision of the brand and strive to achieve the competitive edge, whether it’s through the services or through constant innovation of the product offering.
5- Hire an attorney
Getting expert advice is really essential during the franchising process. Like, you’ll need to fill out a Franchise Disclosure Document. It has a very distinct format you need to follow, and it’s important to have a lawyer walk you through this process. You’ll need to set pricing, create a franchise agreement and determine intellectual property protection.
6- Protect your Brand
When you franchise, you are giving new people the ability to represent your brand. This is one of the major risks of franchising. Clear guidelines should be established for the use of all of the brand assets. You want to be sure that you are sending one clear message from one clear source, and that message is consistent throughout the organization.
7- Support your franchisees.
At first, you’ll need some face time with your franchisees, as well as lots of time online and via phone. Make efforts can to encourage them by celebrating victories and milestones. And last but not least, set up a way for franchisees to communicate with one another, too. A good relationship can take your business a long way.
8- Be an enthusiastic franchisee.
The enthusiasm that you bring to your work & business can turn out to be the ultimatum of success. Enthusiasm brings a level of excitement and energy to the operation that everyone can feel-including your customers and staff. Acknowledge every effort made by your teammates.
To conclude, I want to add another important requirement for successful franchise business growth: Accounting Software.
With SlickAccount, simplify your franchise business. Having a franchise business means multiple location businesses, by the help of SlickAccount you can manage the finance of all your franchise outlets. Keep in check all the financial reports of multiple locations of your business and then easily roll up to a consolidated view. As SlickAccount is a cloud-based software so you can view your data from anywhere. Boost your efficiency by giving your team multiple role-based access to the software.