Franchising has become a very common and profitable means of growing a business. It basically involves two parties; a franchisor and a franchisee. The franchisor is the actual owner of a product or service. All the rights and licenses pertaining to that product or service are held by the franchisor. There are several types of franchise businesses in the market, and a franchisor can prosper only if he is aware of the essentials of the franchising business.
Key to Becoming a Successful Franchisor
Selection of Franchisees
The most important aspect of becoming a successful franchisor is the careful selection of franchisees, as they are the ones who run the extended business and are responsible for the success of the franchisor. A good franchisor does not believe in quantity, but quality. Therefore, he believes in selecting few financially, emotionally and professionally sound franchisees for the business. A smart franchisor not only earns revenue through franchise fees, but also generates income in the form of commissions from suppliers with whom the franchisees do the business.
Successful franchisors believe in process management. They know every bit of their business, right from production to sales of the product. They not only monitor the process, but also take important decisions from time to time, as franchising business is under constant evolution. They also know the importance of training and supporting the franchisees, and are always ready to help them whenever they are in need.
Many times, franchisees lack financial strength and in such cases, a good franchisor steps ahead to help the franchisee. Helping in getting bank loans sanctioned, assisting in planning the business, etc., are a few ways by which a good franchisor makes it easier for the franchisee. Other kinds of support like site selection, training, developmental services, and assisting in advertising are also provided to the franchisee so that a trustworthy relationship is built between the franchisor and franchisee.
A healthy franchisee-franchisor relationship is very important in a franchising business. Trust and respect for each other helps in strengthening the relationship. Even though, the business is defined by a contract, a franchisor realizes that his franchisees can help in recruiting reliable franchisees in the future. He also maintains transparency and proper communication so that there is no confusion between the two parties. Successful franchisors believe in settling disputes amicably so that the business alliance is not hampered in any way.
Marketing or brand visibility is very crucial for business to do well. Franchisors not only use strategic marketing tools for themselves, but also help their franchisees in advertising and marketing their business. The mission and vision of the business is not only shared with the employees, but also with the franchisees so that they consider themselves a part of the parent company and not a separate entity.
Maintaining uniformity in a franchise business is another means for creating brand awareness. Uniformity helps customers to quickly identify and relate to a particular product or service, and this is something that a smart franchisor knows very well. Uniformity also helps in getting clean chits during audits and inspections thereby, increasing the chances of success.
The success of a franchisor also depends on his expansion plans. If the plans are such that personnel and finances are insufficient, it is obvious that the expansion plan would fail. A franchisor should therefore have a systematic and detailed expansion plan. It is better if the expansion is restricted to a particular market at a time so that all the available resources can be utilized for it.
A healthy relationship with franchise brokers helps in acquiring good franchisees for the business. The job of a franchise broker is like that of a real estate agent wherein, he brings a franchisee willing to get into a contract with the franchisor and charges brokerage fees for the same. A smart franchisor develops a vast link of franchise brokers who help in the expansion of the business.
For successful franchisors their integrity matters to them the most, and they do not step back from doing what is right for the business and franchisees. They realize that they have selected the franchisees and do not blame them if anything goes wrong. Now that you know how to become a successful franchisor, pull up your sleeves and climb the ladder of success, if you think you have it in you. All the best!