Hit The Jackpot With Your Next Franchise Opportunity
If you want to run a successful franchise, you have to do more than choose a good business. Owning a franchised location of a well-known, profitable corporation doesn’t bring automatic success. To be successful, you need to run your franchise exactly like the corporate model without deviating from their systems.
Launching a business with an existing brand reputation makes it theoretically easier to be successful; you get all the perks of brand recognition without having to build a brand from scratch. Even before visiting your location, consumers are familiar with your products or services. All you need to do is deliver the brand’s customer experience – and that’s what makes buying a franchise lucrative.
Successful franchises are corporate copies
The most successful franchise in the U.S. is McDonald’s. McDonald’s began in the 1950s as a humble hamburger stand in San Bernardino, CA. Today, there are more than 35,000 locations in over 100 countries. Their secret to success lies in a commitment to consistency, innovation, and resilience. No matter what location you visit, the experience (and the food) is the same.
Ray Kroc, the man who convinced the McDonald brothers to sell franchises, had a vision that customers should get a similar experience at every restaurant location. Consistency matters down to every detail, including which side of the bun the pickles go on a Big Mac.
The most lucrative franchise opportunity you can choose is a business that has strong corporate systems in place that create consistency throughout all locations. If a corporate brand doesn’t have a reputation for consistency across locations, your chances of success aren’t as great.
You need corporate support in the form of systems that run the show, including finances, shift scheduling, recipes, and daily operations. Nothing should be left to interpretation.
Choose a financing method you can afford
Running a franchise isn’t a strategy to get rich overnight. However, you want to turn a profit before too many years go by. The price of your franchise shouldn’t be your only consideration. If business is good, you can pay it off quickly. However, if you need to take out a loan to make your down payment, make sure you can cover the extra expense.
Some corporations require a small down payment and allow franchisees to pay off their franchise directly to the corporation over five to ten years. In other circumstances, the franchisee has to take out a loan, and a short repayment period puts them on the hook for high monthly payments. For example, in the hotel industry, it’s hard to find hotel loans that have repayment terms in excess of ten years. The more you have to pay up front for your franchise, or the longer you need to make payments, the larger your monthly bills will be.
Deviating from corporate systems will cause failure
To run a successful franchise, you need to follow all corporate systems to the letter. Customers expect the same brand experience at every location. Corporate locations have created customer expectations you have to live up to. For example, you won’t be successful by purchasing a McDonald’s franchise and making staffing changes that create longer wait times. You also won’t be successful if you decide the French fries should be cooked for four minutes instead of three.
McDonald’s, like most franchises, created a system to keep franchise owners performing to corporate standards to keep customers happy. Happy customers are the foundation of every successful franchise.
A good product can’t save a bad franchise model
Sometimes a franchise with a great product fails. For instance, Krispy Kreme grew too fast for their own good and eventually failed. The company also placed a heavy markup on the equipment franchisees were forced to purchase from headquarters. That was a greedy move for short-term profits that contributed to their downfall.
A corporation is only successful when its franchisees are successful. The franchise opportunities with the most potential are the ones that support franchisees, and focus on royalties rather than selling marked up equipment and supplies.
Systems are the foundation for success
Regardless of the industry, strong systems are the backbone of every successful franchise. Although you still have to do the work of running your business, buying a highly systematized franchise will increase your potential for financial success.