Franchise Success

Franchise success means different things to a franchisor than it does to a franchisee. However, it is safe to say that, in any given franchise system, franchisees must be thriving and successful in order for franchisors to experience long-term franchise success.

The explanation for this is simple: franchisors get ‘paid’ when their franchisees are able to afford the various fees associated with running their franchises. The franchise fee is a one-time fee associated with the signing of the franchise agreement. So, in the long-term, it is not as huge a consideration as the other recurring fees. Royalty fees, which recur for the length of the franchise relationship, provide a constant stream of income to the franchisor. In order for the franchisor to get paid, the franchisees have to be able to afford these fees. In order for the franchisees to afford these fees, their franchises have to be doing extremely well in terms of sales. In order for the franchisees to have good sales figures, the franchise system must be set up just right, and the franchisees must have the traits and practices that are conducive to franchise success. Clearly, then, many factors go into running a successful franchise company.

 

Aligning Yourself towards Franchise Success

 

As a franchisor, you cannot afford to simply charge your franchisees unjustifiably high fees. These may grant you high revenues in the short term, but they will sour your relationships with your franchisees in the long term. If they feel exploited, and if they are not getting as much from their franchises as they are putting into them, it is only a matter of time before they exit the franchise system. This is not good for you. Stability and continuity are the hallmarks of any successful business endeavor, including franchising efforts. So you want to be sure that you not only recruit from the best possible pool of franchisees, but that you also do your utmost to maintain strong, respectful, mutually beneficial relationships with them.

Maintaining good relationships with your franchisees begins even before you recruit them and have them sign the franchise agreement. It begins when you are first assessing your business to determine its suitability for the franchising model. The research you do on your business, the consequent decision to turn it into a franchise company, and the processes you undertake to transform it into one must all be done with the franchisor-franchisee relationship in mind. From the get-go, you must be aware of the features that will attract good franchisees to your franchise company and keep them there. At the same time, you must balance them with your own need to make a profit as a franchisor. After all, you are running a business, not a charity. Franchise success must be an achievable goal for you and for your franchisees.