How your franchisor can help you achieve financial success
Well defined support should be the foundation of any franchise business model. While it is all too easy to say that a few simple steps ensure finance success, like any situation the circumstances are always unique to the individual.
As such, the right franchisor should approach your financial success through the lens of what will work for your business. This is paramount in my experience, with independent research showing our franchisees are more financially satisfied than 84 per cent of the franchising sector.
With this in mind here are the top four elements that the right franchisor should provide.
1. Flexible finance options
As a potential franchisee, you should look for a reputable and well established franchise network with major bank accreditation for financing. An accreditation allows new franchisees or franchisees investing in a second or even third store secure financing based on the strength of the overall business model as well as their individual circumstances.
A good franchise network will be able to source flexible finance options for the right applicant, even where a candidate is unable to obtain a bank loan (for example, some applicants have cash but fewer real estate assets). As part of vendor finance processes, some franchise networks will work closely with applicants and their finance advisors to obtain a solution that’s best suited to their needs.
2. Investing for growth
Whether you are a potential franchisee or own an established business, a franchisor should be offering continued support and opportunity for further investment. One of the best tools for financial success is wider investment within the franchise; multi-units.
While an investment in a second or third store may seem like a risk, with the right franchise model you should be able, not only to afford to invest, but it should also be more financially viable to hold multiple stores. Particularly in bulky-goods retailers, multiple stores will allow you to leverage economies of scale across the business, so stock purchasing and storage can be combined to get double the reward without doubling your outlay.
At the end of the day you want to ensure that you are always getting the best return on your investment.
These investments should be undertaken in a steady manner, ensuring that you use the depth of knowledge you’ve gained from running your business coupled with that of your franchisor . Talking regularly with your franchisor and other franchises is crucial and can be encouraging as your peers can share a range of valuable insights on your important business decisions, from site selection and development to successful marketing and product selection strategies.
From experience, multi-unit franchisees also have the opportunity to step back from the day-to-day running of the store into a more overseeing role, given the natural shift in staffing structure.
It’s not physically possible to be in each store to manage, so well-chosen managerial staff can mean that a multi-unit franchisee’s ability to focus on other elements of running a business which contribute to its success, like marketing and industry shifts. Holding that overarching focus and having better success in those areas of the business can directly impact turnover and higher profit-margins.
By investing in a multi-unit franchise you are investing in the future of your business and also your future staff as you’ll need them by your side as your business grows.
Many franchisors offer bespoke training for franchisees and their staff. Well trained staff have a direct impact on increased profitability and should always be considered one of the key assets of a successful business – your customers’ relationships with your staff are invaluable to business growth and profit!
When you do move from a single store to multiple units the role as manager changes from working in the business to working on the business. A franchisor should be able to offer recruiting support to help you establish a workforce of diligent, honest and effective staff.
Certain franchise networks also offer additional professional training opportunities out of store, for example overseas buying trips in the retail sector, which will help to develop the supply chain and contribute to a higher quality (and more on-trend) in-store range development and merchandising. Being able to offer the latest products will enable stores to attract more customers and therefore contribute to increasing sales.
4. Lean on your franchisor
Collaboration and communication are key to financial success, and with a franchise network you should have an inbuilt support system that you can rely on. Consider this as a key element when buying into a franchise, as taking advantage of the wealth of knowledge held by the franchisor and the opportunity to collaborate and meet with your peers in the industry is one of the best benefits you can get.
If you are new to franchising, or even if you’re extremely experienced, this support network can save you time, money and help you grow into a successful multi-unit franchisee.