Partnering with a successful and established business via a franchise agreement can be a wonderful opportunity, but not all franchises are created equal, and with your business future at stake, it pays to recognise the signs of a strong franchise so that you can align yourself with the best business possible.
So What Makes a Strong Franchise?
1. A great product or service that can be easily replicated. Many products or services are unique to a certain niche market, or to a particular geographical location. A great franchise candidate has to be able to deliver a product that is in demand across a large and easily accessible market.
2. At least two or three successful locations up and running, ideally before they even sell their first franchise. A proven track record is one of the most valuable signs of a strong ‘proof of concept’. Bonus points for businesses that already have active and successful franchises as well as their own successful locations.
3. They need to have clarity in their processes. The key to franchise success is uniform quality, and in order to deliver uniform quality, operational processes must be clearly defined and accessible to everyone. That means more than just word of mouth during training. If it’s written down and well organised, then that’s a great sign that they take their processes – and their reputation – seriously.
4. Financials that stand up to scrutiny. A good franchisor will be able to tell you what you can expect in revenues year one, year three and year five, as well as what percentage of revenues you can expect to take out of the business as a return on investment. If the franchisor already has franchises up and running, you should be able to access financials from each one.
5. Training programs and mentorships. A great sign of a business that is dedicated to the success of its franchisees is one that has systems in place for training and mentoring. Likewise for a business that encourages interaction between franchise owners. The biggest benefit of the franchise is that you aren’t thrown in the deep end on your own, so make sure you align yourself with a business that will put in the face time to make sure you succeed.
6. They are screening you while you are screening them. A quality franchise isn’t going to sell to just anyone. Every time a franchise fails, it reflects poorly on the brand and weakens the entire concept. Wanting the right person for their business, instead of the first person, is a great indicator of future success.
7. They have a great marketing team. As a franchisee you are paying, in part, for a marketing plan that works. If your franchisor has an effective marketing plan, that shows a dedication to future growth. Bonus points for franchisors that allow franchisees to do their own local marketing as well.
Aligning yourself with the right franchise can be a recipe for success, but finding the right opportunity isn’t always easy. With our checklist above and some valuable insight into your goals and expectations, you will be on the right path to future success.