make a franchise succeed

Buying a Franchise: Is the Risk Worth It?

For those who want to become part of a franchise, there is one common question: Is entering a franchise worth it? The short answer: yes, if you and the franchisor do your parts. You will have a lot of business advantages when you decide to franchise. However, there is heavy financial risk, as with any new business.

Pros of Franchising

The odds are in your favor when you purchase a franchise. When entering a franchise, you get the tools and systems of the whole company. You get a network of other franchisees and their experience.

On top of all that, you get the franchisor’s experience. They have made the mistakes and successes concerning the recipes, locations, hiring, and expenses. They already know the costs, and they’ve taken a lot of the guesswork out of this part of the business. This reduces your risk of a failing company, especially if the brand is well-established. Likely, the franchisor will also have a built-in marketing plan, removing some of this responsibility from your plate.

Having so many other entrepreneurs within the same overall franchise gives you many shoulders to lean on until you get into a rhythm. In franchising, you may find the saying: “You’re in business for yourself, but not by yourself.” You get to have all the benefits of owning your own business without going it completely alone.

Cons of Franchising

Franchising, unfortunately, is a pricey venture. It can even cost you more than the startup to form your own separate business. Plus, you’ll have to pay royalties to the franchisor. And there are other fees, depending on your contract. While the franchisor has a great marketing plan and other tools, you may have to pay to receive this support.

You’ll also have to accept that you’ll have limited creativity. It’s extremely important to franchisors and to the health of the whole company that their branding stays on target. So you likely won’t be able to change anything about how the franchise operates or looks.

One other con related to the contract is how long you may have to stick with the business. If you end up in the wrong franchise for you, you could be stuck for years.

So is Franchising Really Worth It?

The answer to that question varies from franchise to franchise. And it depends entirely on your ability to research and accept the risks. Researching the franchise and asking the right questions can help you avoid costly mistakes. More than that, it will make your franchising experience worth every penny.

How to Strengthen Your Franchise: Avoid These 7 Costly Mistakes

When investing in a franchise, you want to ensure that your business will continue to receive success. Strengthen your franchise by avoiding these 7 mistakes that could harm your brand and lead to franchisee failures:

Inflexibility

As the franchise owner, you are in charge of making the major decisions that effect your entire franchise chain. However, don’t be so tightfisted that you’re unwilling to listen to the ideas your Franchisee owners have. You don’t have to agree with everything that they suggest, but be open to new ideas that can strengthen your franchise and brand.

Expanding Too Quickly

A franchise is meant to grow and succeed, but it doesn’t (and often can’t) happen all at once.  ooking back on its first four years of operation, admitted that one of its biggest early mistakes was leaving the markets of the Southeastern states before it was ready. It granted several franchises for locations in California, which, one after another, turned into nightmares for franchisees and franchisor alike. The franchisees were simply too far from the company’s headquarters. Support and training were difficult; regular monitoring and assistance were nearly impossible given the expense of travel. Small difficulties went unattended and grew into large problems that eventually led to costly restaurant closings.” Let your franchise grow comfortably at a rate that you, the Franchisor, can maintain.

Hiring the Wrong Franchisees

Along the same lines, when you do decide to add more franchisees, take the time to hire someone with a business ethic that matches your own. Andrew A. Caffey suggests that, “The best way to avoid this problem is to make sure the franchisor is adequately capitalized to allow for slower, more measured growth, and allow time for the company to identify the best prospective franchisees possible.” Remember, this business is supposed to last long term. Invest the necessary time it takes to hire the right people.

Forgetting Employees

Now that you’ve hired the right people, be sure to take care of them. Understand the reasons they are working for you so that you can ensure their needs are met. Do your employees enjoy the flexible hours? If so, applying stricter hours to all franchisees could be a big mistake that could loose future employees. Are they working for you because they believe in your product? Then changing the product too drastically might scare them away.

Remember, dedicated employees mean a thriving business. Be sure to care for them and meet their needs so that they can continue to meet the needs of your customers.

Cutting Costs that Compromise the Customer

Saving money on unnecessary costs is a good thing, but compromising the customer’s experience is not. Just like with your employees, be aware of what keeps your clients coming back again and again. Do you have special discounts or deals that they look forward to each month? Getting rid of them altogether may be a mistake. Is there a special item on your menu that your customers adore? Find what keeps your customers coming back, and give them the quality experience they have come to know and love. Remember, it is much easier (and cost affordable) to retain a loyal customer than entice a new one.

Not Sharing “Secret Sauce”

Each business has secrets to its success, whether its a special recipe, a method of training employees, or the attitude with which it receives potential clients. President of Osteo Strong Franchising, LLC, Kyle Zagrodzky, puts it this way: “Entrepreneurs are charismatic, and when they’ve built a successful business and start considering franchising, they often severely underestimate how much of their personal touch makes that business thrive. To win on a massive scale, a franchised company has to be duplicable, but you can’t replicate yourself. Franchisees have to feel connected to the spirit of the brand, and the best way to do that is through great educational resources. Offer franchisees immediate, easy access to a full suite of educational tools that will show them the recipe for your secret sauce so it can be recreated in every unit.”

Trust your Franchisees with the secrets to your success so that your brand can continue to thrive.

Brand Inconsistency

Your brand is how your customers recognize you. If your logo or brand colors are changing from location to location, it will confuse customers, and make some of your Franchisees start to look like cheap knock-offs. Keeping consistency is especially important when rebranding your business.

It’s not all just about logos, however. Are you updating your franchise menu? Offering a new discount? Branded marketing materials should be consistent across your brand, and for that to happen, they need to be easy for your franchisees to access. Here at Divvy by Alexanders, we specialize in helping Franchiees keep branding consistent over all of their social media and print marketing materials. Find out more about Divvy here, or contact us in the form below for additional information.

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