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Good and Bad Practices in Managing a Franchise

If you are considering opening a new franchise, there are many things you need to keep in mind. These encompass everything that years of experience have shown to be (un)helpful and serve as guidelines and tools for running a franchise. Franchise models began appearing as early as the 1880s, so their current form is merely a reflection of a long history and development. Thanks to this long tradition, well-established business plans and management methods have evolved. Although business models and markets have changed over time, some fundamental practices for building a successful franchise have remained at their core.
Some of these have proven to be very useful, while others serve as examples of what not to do. Therefore, before starting, managing, and running a franchise, it is helpful to know which mistakes to avoid and which behaviors to focus on in order to improve business operations.

Do thorough research on franchises before purchasing.

Never enter into buying a franchise thinking, “I already know which one I’ll buy!” First and foremost, a step that many may take for granted but often isn’t done thoroughly and thoughtfully, is researching franchise opportunities. Specifically, before deciding to purchase that particular franchise, study all other options available. This way, your final decision will be well-founded and valid—you will be able to compare costs, business volume, brand strength and popularity, years in operation, and opportunities for growth and expansion. Considering these factors, your choice will have a solid and well-supported basis.

Make Use of Existing Franchise Resources

One of the biggest advantages of the franchise business model is that systems and processes are already designed, structured, and prepared, and it is up to the person who acquires them to adopt and continue running the business successfully. Therefore, every franchise already has human and material resources that can be of great help to a new franchise manager.
Every element is designed specifically to help and facilitate the growth and development of the franchise – in this process, the franchisee must primarily focus on achieving profits that will benefit everyone (both employees and the end users of the products/services).

Choose the Right Franchise

If you follow all the steps mentioned so far before purchasing a franchise, your final choice will be correct and profitable. So, if you have carefully examined the options and gained insight into the resources and benefits that come with a particular franchise, you are ready to make your selection.
Ultimately, the choice should be such that the franchise name is already well-known to the general public, so you won’t need to invest additional resources and funds in promoting the name and brand.
Additionally, you will have the opportunity to train and develop your employees, with people available to provide help and support at any time. Finally, you will be able to choose your business location and design marketing campaigns. In other words, the level of decision-making freedom in your business will be so high that you’ll truly be your own boss!

Communication with Other Franchisees

As with any business involving interaction with other people, communication is also key to success here! Maintaining contact and communicating with other franchisees can be extremely valuable—perhaps even more than you think. For example, when deciding which franchise to purchase, the best insight into how the franchise operates comes from existing employees and the current owner. Inquire about available resources and support, organizational climate, and company culture, and build a clear picture of what your experience within the business might be like!
Even after purchasing a franchise, regularly maintain contact with people inside and outside the franchise—advice on marketing, hiring, business management, and balancing professional and personal life is always valuable! This is also a good opportunity to highlight one of the biggest advantages of franchising. The already established structure of people involved is extremely important, especially compared to starting a business from scratch. In this way, you’ll be able to gather information and make decisions based on facts.

Keep Track of Your Finances

For the best possible start in business, as a franchisee, always be open and honest about your financial capabilities. This way, regardless of your financial situation, you will establish a good and transparent relationship with the franchisor and be able to plan each future step more accurately and in detail.
Franchisors often require the franchisee to pay additional fees (on top of the initial payment for purchasing the location) – a franchise is not necessarily a cheap option. It requires careful planning and thoughtful action, as well as sufficient financial resources.

Achieving Goals

However, no matter how available the franchisor is, they cannot be expected to rescue every location that simply isn’t performing well. Therefore, the primary responsibility for the success of a franchise unit lies with the franchisees.
Encouraging an entrepreneurial spirit is desirable, but a franchisee must remember that a franchise is successful precisely because it follows standardized practices and procedures that have (in most cases) proven effective many times. Any deviation from these standards should be explicitly approved by the franchisor, and major changes implemented independently usually cause far more harm than benefit.

Anyone who thinks it’s better, in order to make a better impression and increase their chances of purchase, to exaggerate their financial situation will very likely find themselves in a situation they won’t be able to easily get out of. Honesty and openness are key not only to communication but also to successful business!

Considering the financial status of a candidate for purchasing a franchise also reflects on the owner themselves – any owner who truly cares about the franchise and is committed to the quality of the business will not skip the financial assessment. Additionally, some of the most successful franchises even offer financing options to assist with the initial acquisition of the franchise.

Operating Costs

In addition to the initial investment and fee payments, do not overlook the operating costs themselves in the overall financial picture. This means that, once you take on the managerial role in the franchise, you will very likely need or want to make some changes, while also continuing to maintain the business.
Like everything else in the business world, maintenance and changes come at a cost, so do not undertake anything for which you lack the funds! Paying rent, employees, insurance, or taxes are just some of the expenses you will face.

Always stick to the franchise business model!

At the moment you sign the agreement and take on the primary role in the franchise, you must, among other things, agree to adhere to the brand standards and the franchisor’s business model.
Although you will have considerable freedom in decision-making and managing the business, remember that in this type of business it is important to also maintain the existing practices (of course, with some improvements).
Do not deviate too much from the “established” franchise operations – let it serve as your secret weapon for success!

Conclusion

Although franchising is theoretically a very simple way of doing business, it still requires time, dedication, motivation, and persistence, especially if you plan to focus on expanding and growing the franchise.

On the other hand, if you master your tasks and responsibilities, a franchise is the most profitable form of business—especially for any entrepreneur who doesn’t have the funds to start a business from scratch!

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