Checklist for a Successful Franchise System

There are few distinguishing characteristics that successful franchises all have in common, which sets them apart from competing franchise companies. In order to attain greatness, franchisors should compile a list of characteristics and use them as building blocks in operations. This method can lead to sustained franchise system growth, greater brand recognition, and franchisee happiness.

It is much simpler for a franchisor to recruit and add qualified franchisees  when the franchisor possesses these characteristics. This increases the likelihood of the best franchise to own franchise becoming successful.

1. Franchisee ROI must be equitable.

There needs to be a healthy equilibrium between the profits made by the franchisor and those made by the franchisees. The following is an excerpt from John Love’s book McDonald’s: Behind the Arches: “[Ray] Kroc travelled light years ahead of other franchisors of his day, but not through disciplining franchisees.” Instead, he resorted to franchising to harness the potential of business owners and operators. Franchisees had to follow strict operating requirements, but they could promote their services however they wanted. He also offered them the chance to become rich before him, which was unheard of in franchising.

2. The franchisor is obligated to uphold the standards it has set for its franchisees and to provide training and support.

The most common reasons for the failure of a franchisee are¬†absence of expertise as well as insufficient financial resources. Create a profile for potential franchisees. And if potential franchisees don’t meet this criteria, it’s perfectly acceptable to turn them down. If franchisor chooses to work with brokers, then he still needs to maintain complete control over the franchise sales process. It is necessary for franchisor to adhere the set of operating standards in order to develop a successful franchise firm. To accomplish this, franchisees need to receive quality training and continuing support. The top franchise brands are differentiated from the rest of the competition by maintaining consistent franchise execution and operating standards.

3. The leadership of the franchisor needs to be actively involved in the franchise business.

The franchisor’s senior leadership must be involved in the franchise to understand its successes and faults. When it comes to the operations of a franchise, there is no room for unexpected events. Regardless of the forum, franchisee feedback must make its way to the leadership of the franchisor. When I dealt with many franchisors, the ones that were the most successful were led by individuals who kept in contact with their franchisees either directly or through senior subordinates. They were proactive in finding solutions to issues and made an effort to maintain contact with the most successful franchisees.

4. Franchisees must be involved in business and marketing efforts and have their feedback sought.

The franchisor is obligated to consult with their franchisees before making crucial choices. In the event that significant adjustments or alterations are made to the franchise’s operations, marketing, or finances, franchisee representatives should be included. You may accomplish this with the help of the FAC, the advertising committee, or some other representative group. For instance, before new goods and services are allowed to be introduced into the programme, franchisees first need to test, analyse, and quantify them. Before launching brand new items, services, or pieces of equipment, pilot them at a few select franchisee locations first. This procedure yields a result that is credible and objective, upon which the remaining members of the franchise network can base their decision.

5. Evaluate franchisees’ success to improve the franchise system’s performance.

In spite of certain obligations that are outlined in franchise agreements, many franchisors, in my experience, fail to collect regular financial results or reports from their franchisees. This is something that is required under the franchise agreements. Due to the absence of essential information, franchisors are unable to determine which of their franchisees are successful and which can benefit from additional support. The utilisation of key performance indicators (KPIs) is a fantastic method for analysing and assessing the success of franchisees.

When franchisors work toward achieving operational franchise excellence by adhering to these five items, it will give a pathway to higher success for their businesses.

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