Top 7 Franchisor Questions

Running a franchise business is tough. It’s fast-paced, entrepreneurial and always challenging. We’d like to make your life better and help you, as a franchisor, as much as possible. Here are some frequent questions and challenges facing franchise businesses.

  1. How do I turn my successful business into a franchise?You’ve launched a business and believe the best way to scale it to the next level is by franchising. You’d like to see your business on every street corner like some of the biggest franchises out there. However, how can you discover if franchising really is for you? The easiest way is to get in touch with franchise consultants or franchise lawyers to discuss the matter in detail. Get multiple opinions and avoid advice from people who nod and approve your every word. The decision to launch a franchise should not be taken lightly and you need everyone to bombard your strategy in order to remove any critical flaws. You may have a successful business, but most of the time, franchising is not the best strategy.At a minimum, you should ensure you are well capitalized (because launching a franchise and properly executing the strategy in the first years is very expensive) and that you can differentiate yourself from the other franchises on the market (why would anyone should your sub shop with no credibility instead of one of the big players?). If your idea is validated, you can start thinking about how to make your business processes more scalable and easy to replicate. It is at this point you should be contacting us to work with you on optimizing these processes and producing operational software that will make your franchisee’s lives easier. You don’t need to have fleshed out all of your business processes in great detail before contacting us: we’ll work with you and iteratively refine FranchiseBlast for your business.
  2. How do I attract better franchisees?The typical answer to this question focuses on your sales & marketing plan, which channels should you address (tradeshows, Internet, franchise consultants), how to ensure your current franchisees succeed (ensuring your franchise disclosure documents look good), etc. Aside from these traditional considerations, there are two additional elements you should consider.First, are you providing your franchisees with high quality operational software and an intranet with training material? If you don’t supply software to your franchisees, you’re effectively sending the message that they can operate any way they want, which scares away most franchisees because the franchise does not appear well structured. There is no arguing that an appropriate software solution can save its users lots of effort. Additionally, if you’re running old software that is not visually pleasant or easy to use, you might also scare away some great leads because today’s franchisee is either comfortable with software (and therefore expects a polished product, because all the software they’ve chosen to use previously offers a high level of quality) or they’re not (in which case they need software that is extremely simple to learn and operate).Second, you need to make sure you will not cannibalize an existing franchisee’s sales by selling a territory to this new franchisee. When this happens, both franchisees end up with reduced sales and everyone loses. You can convince a franchisee this won’t happen by visually demonstrating where the existing customers are located on a map.
  3. Should I sell online? Should I provide online services to my customers?Absolutely. Today’s consumers and small businesses turn to the Internet on a daily basis to discover companies that could solve their problem. Offering online ordering to your customers can help you increase sales, regardless if you are a product-based or service-based franchise.Service-based businesses can actually capitalize on e-commerce to make a customer’s life easier by allowing the customer to schedule a visit by themselves at any time of the day or pay for the services online with their credit card. At the same time, this reduces the time franchisees spend on the phone, increasing their profitability. Online services allows you to attract new customers via social media and search engines and better monetize your existing customers by inciting them to become recurring customers.Product-based franchises, on the other hand, can offer more traditional e-commerce solutions. The main challenge in a franchise-context is to determine who should be credited with the sale. Depending on the franchise, the product may be supplied by a local franchisee or by the franchisor from a centralized warehouse. Both have their advantages and the best solution varies between franchise systems. A few interesting solutions are available to today’s franchisors: orders can be dispatched just-in-time to suppliers or the whole warehouse management can be outsourced to specialists. The former reduces the funds the franchisor must dedicate to carrying stock while the latter drastically reduces operational costs by sharing the warehouse with other companies, taking advantage of discounted shipping fees and having to hire your own staff.
  4. How can I change the way franchisees do things?The first important realization is that you should not attempt to force them to do anything without involving them in the process. This fails almost every time. You should involve your franchisees in the loop, explain current issues, propose various solutions and get them involved in the decision process. Even if they’re not in love with the solution, they’ll be more likely to apply it because they know the reasons behinds it. Once an appropriate solution has been selected, you should build it into their business processes to reduce hassle and save them time & money. Having everything integrated into the software you use on a daily basis has the side effect of nudging them in following appropriate techniques. Finally, assisting them with additional training during the transition phase and acting on any post-implementation feedback is critical.
  5. How can I get my franchisees to fully pay their royalties on time? The first step is to eliminate the time gap in reporting: you need to know the sales reports in real-time. Too many franchisors wait for their franchisees to send them (email/fax) the sales values. Not only does this introduce additional delays, it also opens the door to falsified reports. As a franchisor, you need accurate data and you need it immediately. The second step is to build incentives (either positive or negative) for the franchisee to consistently do what your request of them, on time. A positive technique could be reduced fees, additional marketing for their location or free supplies whereas a negative technique could go as severe as preventing them from using certain features of the software until the royalties are paid.
  6. How can I make the franchise more efficient as a group?As a franchise, you can implement franchise-wide solutions at a lower cost than if each franchisee were doing them individually. As an example, your inbound call center can accept calls for the whole franchise and dispatch the work accordingly. Your outbound sales & marketing efforts can also be done on a franchise-wide level in via different channels. In addition to traditional advertising channels, you can consider sending out email campaigns and monitoring social media (Facebook, Twitter, etc.) for your franchisees. You can even leverage your collective buying power and centralize supply/stock purchasing from within the Intranet. This enables you to monitor exact sales levels for each supplier and allows you to negotiate better deals based on sales volume.
  7. How can I communicate more effectively with my franchisees?You first need to realize that each franchisee is different and that some techniques work better with a particular franchisee than others. However, a common baseline should be established which ensures you communicate with your franchisees on a structured, recurring basis. First, monthly newsletters (by email and/or within the portal) are great way to give high level information about what’s new in the franchise. Second, publishing support material or training videos in your franchise’s document repository gives them a centralized location to find the solutions to their problems. Although both these channels enable you to easily push information out to your franchisees, you sometimes need to solicit feedback from them. In this case, franchise forums let you exchange with the franchisees publicly, allowing the other franchisees to join the discussion. Finally, periodical phone or face-to-face meetings with each individual franchisee or the franchisees as a group are the best way to brainstorm and discuss sensitive franchise issues.