The Best Franchise Models Do These 10 Things
What makes certain franchisors stand out as the best bets for potential franchise owners? To find enduring, profitable franchisors, seek out companies that do these 10 things.
1. Show a history of success.
Track records matter. The best franchise model has enthusiastic franchisees, a good financial record, a positive reputation with customers, and a plan for its future.
Potential franchise owners can research financials easily through public documents. A franchisor should make current franchisees available for unfiltered talks with prospective owners. Franchisees should ask how the company has fared during economic downturns, and how it managed not only to survive but to thrive, in tough times.
2. Have a solid, consistent process for awarding franchises.
The franchisor’s process for vetting and selecting potential franchisees certainly matters to anyone hoping to buy a franchise. Why does it also matter to those who are already franchisees?
In a franchised business, one poorly chosen, badly performing franchisee can affect the reputation of other franchise locations. A company that is selective about awarding franchises is a company that doesn’t take risks with its reputation for the sake of quick expansion. Selectivity assures franchisees that their fellow owners will be as committed to the business as they are themselves.
The best franchisors have clear standards for how to qualify as an owner. They lay out the financial requirements plainly, but don’t stop there: They also give a realistic assessment of the work involved for new franchisees. They are willing to reject applicants for whom the franchise isn’t a good fit.
3. Lack of legal problems.
While this list outlines what successful franchisors should do, there is a major “shouldn’t.” The best franchisors shouldn’t be dogged by legal problems.
A franchisor with lawsuits pending against it could end up paying settlements, which in turn could affect profitability and reputation. Legal actions against individual officers of the company could signal a business with problematic leadership. But how does a potential franchise owner know whether a company is the subject of litigation?
The Federal Trade Commission requires franchisors to file an annual Franchise Disclosure Document (FDD). Franchisors must give a copy of the FDD to every potential buyer. Among the FDD’s disclosures are all prior litigation involving the company, such as fraud convictions, violations of franchise law, or claims against the franchisor by its own franchisees. Such claims could be a red flag indicating problems between franchisees and the franchisor.
4. Support franchisees long beyond the initial sale.
Franchises sometimes are referred to as “turnkey” businesses, meaning everything is ready for the new owner to start work. But turnkey doesn’t mean the franchisor simply opens the front door, then walks away. The best franchisors support their franchisees for the life of the relationship.
Support includes more than just giving franchisees a line to suppliers. Franchisees should receive continuing training, help with finding locations if necessary, and assistance in hiring and onboarding new employees. Some franchisors provide franchisees with payroll software, saving franchisees the work of finding their own payroll systems. Some franchisors provide human resources help and advice to franchisees. The best franchisors offer mentoring programs linking veteran franchisees with new ones, so the new owners benefit from their colleagues’ experience.
5. Provide ongoing training.
Most franchisors promise initial training. They want new franchisees to learn their processes and become familiar with their products. But the best franchisors stay engaged beyond initial training and provide continuing training. Why is ongoing training essential to the best franchisors’ business models?
● Training sends the clear message that the franchisor is setting the franchisee up for success. It attracts franchisees because it signals the franchisor invests in each franchise with more than just money.
● Training creates confident franchisees and employees who feel more personal “ownership” in their work and provide better service.
● Employees value training and view it as a reason to stay with an employer. Training not only builds knowledge, but it also helps keep that knowledge from walking out the door.
● The franchisor needs to ensure franchises keep up brand standards. Training conveys the brand message and keeps franchisees informed about changes to the franchise.
6. Create relevant, professional marketing and advertising for franchisees.
The best franchisors provide marketing materials and advertising campaigns to their franchisees. They don’t expect local owners to come up with their own marketing. New franchisees may have no experience in marketing and advertising, and they would spend valuable time trying to figure out marketing strategies for themselves.
Look for franchisors with a clear marketing strategy including national and local advertising, promotions and marketing materials. Those ads and materials should be ready to go even before the franchise opens for business. Poor franchisors lack cohesive marketing and drop the responsibility for advertising on their franchisees’ shoulders.
Importantly, the franchisor should be willing to talk with individual franchisees who say ads or promotions need adjustment for their specific markets. The local franchise owners know their territories best, and a smart franchisor wants to hear from them.
7. Listen to franchisees’ feedback.
Franchisees are “on the front line” and know, from daily experience, what customers want and what’s profitable. Franchisees’ feedback, positive and negative, is invaluable, and the best franchise models solicit and listen to it.
Look for franchisors with an established process franchisees use to contribute comments and ideas easily. Do franchisees know whom to contact when they have an idea or comment for the franchisor? Does the franchisor have a process for acknowledging that feedback, so the franchisor knows headquarters is listening?
8. Show dedication to quality control and brand standards.
A franchisor with a serious dedication to quality control will make regular site visits to franchises, notes Mark Siebert, a franchising consultant and author of several volumes on franchises. The franchisor needs to see, first-hand, that local owners are representing the brand well and upholding the company’s standards. The idea of site visits by the franchisor should attract—not worry—potential franchisees.
If the franchisor takes quality seriously and expects franchisees to adhere to its standards, the franchisees benefit. The company as a whole gets a reputation for consistency and quality at every franchise, which keeps customers coming back.
9. Provide the buying power of volume discounts.
A key advantage of a franchise model is that individual franchises benefit from the larger franchisor’s ability to buy in bulk or arrange volume discounts with suppliers. A single, small business purchasing its own supplies doesn’t have that kind of buying power. Franchisors should outline for potential owners the kinds of volume discounts possible, and how those discounts get passed along to the franchise level.
10. Keep up with and adapt to industry trends and technologies.
A franchisor should keep an eye on its established competition and watch for emerging competitors. The best franchise models do research, so they can move quickly to add new products, update processes, revamp branding, refresh advertising campaigns and take steps to stay ahead of trends.
Franchisors compete for the dollars and attention of potential franchise owners. Not all franchisors are equally picky about whom they choose as franchisees, and not all franchisors stay engaged and supportive after the deal is sealed. Use these 10 behaviors of the best franchise models to decide which franchisors are the best bet.
Kitchen Tune-Up is one of the franchises that has been making these 10 things best practices for over 30 years. We are backed by a leading franchisor in the home services industry, Home Franchise Concepts (HFC). HFC’s vision is to be the leader in creating value for every owner within our family of brands. Want to know more about franchising opportunities with Kitchen Tune-Up? Visit ktufranchise.com or call 1-888-980-5210 to speak to a franchise licensing advisor.