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Whether you are a franchisor or a franchisee, there are several important considerations to contemplate when building a successful franchise business.
Theultimate goal of the hospitality industry is to provide customers with an enjoyable and memorable experience, whether it’s dining out, relaxing in a luxury spa, or having a blissful night’s sleep in a hotel. Ensuring that each person is taken care of is paramount. Hospitality professionals must always focus on attention to detail. BrandPortunity Hospitality Consultancy has considered the essential points when building a successful franchise business.
Build a strong brand
To retain customers and franchisees, your franchise will need to have strong branding. Uniformity is crucial and should be instantly recognizable. A convincing brand contains many parts, including the company name, logo, and brief strapline of the products or services offered. Creating a recognizable shop front with colors that can be easily associated with your brand is essential. For example, McDonald’s is well known for its punchy yellow letter ‘M’ on a red background. When you franchise your business, it is important to consider the look and ambiance and how easy it is to replicate. You might even want to plan a refurbishment to make it more appealing.
Plan for franchising success
It’s vital that you develop an intelligent business plan. The success of a franchise is the franchisee. The million-dollar question is, ‘will the business work as a franchise system in practice?’. You will be making many critical decisions, so it’s imperative to have a robust strategy in place. As part of your business plan, you need to ensure sufficient profit for your franchisees after deducting business costs, royalties, and other typical franchise expenses. A business plan provides the necessary information to develop a watertight financial model.
Create a competitive advantage
To be an appealing franchise, creating a competitive advantage within your brand will make you stand out from your competitors in the market. Consider each aspect of your franchise system, product offerings, service, the experience you will offer your audience, and your key differentiation to be exceptional. By considering this phase successfully, the world is your oyster.
Duplicate what makes your business successful
Franchisees are the operators on behalf of the franchisor. To achieve success, the franchisor must consider all obstacles the franchisee might face and provide relevant management support and training. To realize the same success, the franchisee will replicate the parts of the business that make it successful. If you cannot replicate these elements, the franchisee must ensure success by adapting to the market and consumer behaviors by understanding their needs and preferences
Know the pros and cons of franchising
There are two advantages associated with franchising. Less capital is required to establish a franchise network because the franchisee invests in opening an outlet and is responsible for managing staff and day-to-day operations. The franchisor retains control over the franchise whilst the franchisee maintains the business. The franchisor is obliged to provide the franchisee with operational training, support staff training, advertising, and consistent development and improvement of the franchise systems to ensure profitability. Poorly performing franchisees can be troublesome and time-consuming to deal with.
Be smart with advertising
There is no doubt that strategic advertising and marketing positively impact sales and growth, especially with the presence of the power of social media, and the innovation required for fans’ engagement. Potential franchisees can gauge the success and attractiveness of a franchise and see the significant advantage that franchise networks have over independent businesses.
Select the right franchisees
Franchisees are the lifeblood of any franchise system. You must choose the right franchisee to manage staff and day-to-day operations. A franchisee who lacks skills, commitment, or capital could cause the franchise to fail and damage your overall reputation. Ensure that you have well-designed procedures in place for successful franchisee recruitment
Ensure all franchisees succeed
Steady, well-planned, and considered growth ensures profitability rather than ambitious expansion that can lead to franchisee failure. Whilst establishing new franchisees is important, nurturing existing franchisees is essential, providing the needed support and accompaniment in their journey.
Ensure franchisees are compliant
A franchisee is an owner of a business rather than an employee, so compliance is essential. A strong culture of compliance highlights the benefits you can provide, including experience, knowledge, and investment to improve your business’s value and growth potential. Ensure that adequate, consistent procedures are in place across the entire franchise. Consistency in customer service leads to customer trust and repeat business, attracting potential franchisees.
Set up open lines of communication
Good communication with franchisees helps to ensure compliance. Provide support for franchisees and obtain feedback to improve your franchise system steadily. Organize and calendar several meetings and annual business reviews highlighting the positive impact of the brand in the market, and plan any required improvement and enhancement of the product/service offering in a particular market.
Know your legal obligations
When developing a franchise system, you should consider applicable laws, particularly Franchising Code of Conduct legislation. It’s prudent to obtain detailed advice about how the laws affect the various aspects of your franchise. Consider the structure of your business and how you own the assets associated with your franchise. The franchise agreement and disclosure documents should be at the core of your legal considerations.