Common Denominators of Great Franchisors

Franchising is a business model where a company expands its product and marketing concepts by product and brand name license, payment of fees, and control. It is also a concept that can be applied to an unlimited number of types of business from fast food … to tax preparation … to retail outlets … to auto care … to cleaning services … to fitness centers … to you name it!

In short, franchises exist to distribute goods and services while providing a uniform high level of quality. The franchise company (the franchisor) depends on those who buy his business plan and the franchise buyer (the franchisee) relies on the franchise company for training and on-going assistance to successfully establish and maintain the business.

While there are many different franchise opportunities … there are some basic characteristics that all great franchisors share. The following present a review of the common denominators of all great franchisors.

Franchising is a Single Unit

While franchisors and franchisees are separate and unique they also depend on each other and need each other to function successfully. They are both part of the same structure … just like the mind and the arm. If either part has a problem then the entire unit also has a problem.

Franchising is a Relationship

While it is true that the relationship between franchisor and franchisee is both a business and legal one the really great franchises develop a relationship that is more personal. Franchisors and franchisees should have a relationship based on trust, respect and consideration for the investment each one brings to the table. Only when both sides perform their jobs well can they achieve and maximize their combined potential. Of course, this kind of relationship demands that both sides are fully cognizant of their responsibilities

Great Franchisors Know What Motivates Franchisees

Savvy franchisors never lose sight of why people invest in a franchise. Some of the most significant reasons include:

• More Options. Franchisees want to be their own boss and own their own business.
• More Involvement. Franchisees want to take a proactive stance concerning their career and business activities.
• Better Quality of Life. Many franchisees start their own business to acquire more time to spend with their family … this can also mean family members working together.
• Challenges and Accomplishments. Many franchisees have greatly succeeded in their careers and see new horizons in their own business enterprise.
• Generate Opportunity. A successful franchise can create jobs and provide opportunity for others. Franchising is a great business model for those who want to give back to their community.
• Financial Rewards. Many franchisee are simple tired of working hard to help others get rich. Now they want to take control of their live and generate revenue for themselves and their families.

Why Franchisors go the Franchise Route

Typically, franchisors develop a business plan and market their business as a franchise because they want to grow their business. Franchising offers benefits for those who want to expand their business venture. Basically, franchising creates a form of financing without the franchisor having to deal with outside investors, or the Small Business Administration, taking a second mortgage, or using other methods to raise capital.

What’s more, franchising uses of system where franchisees are in essence entrepreneurs with a vesting interest in the franchisor’s business. As such, they are more motivated and will definitely be more involved than a salary employee.

Additionally, the franchise business model enables a business to expand in a much more rapid fashion. If the market opportunity that is presented is truly exceptional, that growth could even be explosive. As sophisticated business people know a good opportunity when they see it. Franchising is one business model that enables investors to quickly take advantage of an opportunity.

Finally, the franchising is a system with lower risk factors for the franchisor because they earn royalties which are contributed by the franchisees’ gross sales. Also franchisees are responsible for the start-up costs of their new franchise outlet, not the franchisor.

It should be noted that mega successful franchisors realize that the franchising concept is in essence a business in and of itself. That is they need to be focused on the business of franchising in addition to being successful in their own brand of product or service.

The Business of Franchising

The successful franchise is a function of four elements:

• Putting together an outstanding franchise team.
• Motivating franchisees.
• Building a powerful franchisor/franchisee team.
• Devotion to the strength of the brand.

These are four basic areas be each carry equal weight in the overall success of the business. If a franchise id deficient in any one area – it simply will not be functioning at its maximum potential.

Creating a Top Franchise Team

A results-minded franchisor needs to be extremely selective about whom they choose at as franchisee. The individual must meet the same criteria and possess the same characteristics that they would want in their own employees. Beyond that a franchisor should be concerned that a potential franchisee’s own business goals and objectives will be satisfied by the franchise opportunity they offer. And franchisees need to understand the skills and requirements needed to operate a successful franchise unit.

Motivating Franchisees

Once a franchise is awarded, the franchisor needs to train and motivate the franchise buyer. In short, the franchisor is the expert having done all the hard work, the trail and error, and creating a business plan that works … and works repeatedly. The most difficult part of training is often communication. An excellent franchisor may not be an excellent communicator or trainer.

In the real world, this means that a successful franchisor may do an excellent job at managing corporate owned-and-operated outlets … but may not be able to transfer this level of achievement to a business model or effectively train others to duplicate their accomplishments.

All great franchisors are aware that they must train individuals who most likely have no industry experience. These franchisors are able to write down their action plan of success and create an operations manual … or several manuals devoted to different segments of the franchise model.

Building a Powerful Franchisor/Franchisee Team

One of the reasons why franchising is such an ideal business opportunity is because the individual franchise buyers doesn’t have to go it alone … the have support of the parent franchise company working with them. Just like a successful sports team, great franchisors needed to able to get a variety of franchisees (all with different goals and business experience) together and create a successful aggregate.

This means all decisions must be made in the best interest of the team as a single unit. Franchisors must carefully evaluate their decisions and take action based upon how they will positive influence the team structure.

The most successful franchisors bring together franchisees via business meeting, conferences, email and print newsletters. These are all vehicles that establish clear lines of communication and the free exchange of ideas.

Devotion to the Strength of the Brand

As previously stated, when an individual buys a franchise they are buying a business plan … but also the use of the franchisor’s brand, its logotype and its good reputation. All great franchisors are devoted to maintaining their brand’s strength and integrity. Ultimately, the brand has to mean something to the consumer. The brand has to be symbol of uniform quality and performance. When franchisor and franchisee work together for the mutual benefit of both and are respectfully dedicated to meeting the needs of the consumer – then the brand becomes a symbol of trust. And if this commitment is unwavering, over time, the brand will become an icon of American business.