The capacity for growth that a business has is traditionally limited by the amount of investment it can apply to that purpose. Franchising is a great way to get around this issue quickly by harnessing the capital and labour of franchisees on behalf of your brand. The franchisee invests the capital for the new franchise, while also accepting most of the risk associated with that investment. Financially, this makes growth a significantly lower-risk endeavour for the franchisor than it might otherwise be. Despite that, however, businesses can’t afford to let their franchises fail.
The benefits of a successful franchise are obviously mainly financial. The cost of failure, though, is further reaching than the loss of that profit, and isn’t as immediate. When a franchise underperforms and goes under, it can damage the reputation of the brand as a whole, and repeated failures will inevitably discourage other potential investors. This will make it more difficult to attract new franchisees to support future growth. Because of this, franchisors need to invest their own time and effort into ensuring the success of their franchising program, even if they’re taking on relatively little direct risk.
Offering the right kind of help
Franchisees need support from their franchisor in order to succeed, but micromanaging a franchisee too much defeats much of the purpose of having a franchising program in the first place. Rather than looking over their franchisees’ shoulders, businesses need to make sure that they offer the right training and the necessary tools that they’ll need in order to succeed.
Many franchise investors are first-time entrepreneurs, and often don’t even have any significant background in their new industry. Facilitating their success, then, means providing industry knowledge, management training, and the tools they’ll need to operate and be competitive.
Building a training program
There isn’t exactly one right training program for all franchisees. That said, franchisors absolutely need to offer an in-depth training phase for their franchise investors. Running a franchise is a serious job, and it requires a lot of knowledge and a variety of skills. Not only do they need a thorough understanding of your business’ standards and business practices, they’ll also need training on how to effectively manage their new business’ finances, their employees, and their customers.
Initial training should provide a general foundation in all the skills that your franchisee will need to run their franchise. After this phase, it’s not enough to simply turn them loose and hope for the best. Network new franchisees with more experienced mentors, and encourage them to seek advice and feedback regularly. This will allow them to address specific issues and gain additional insights as they go while ensuring that they’re not left without support when they’re trying to make their new business succeed in the real world.
Providing the right tools for the job
Skills training is critical, but having the right tools at your disposal can also make all the difference. Knowing what options exist, and how to use them to make your life as an entrepreneur easier, is just as important as developing the skills you need to manage a business. As a franchisor, passing that knowledge on to less experienced franchisees is critical.
Cash flow management tools
Even a business that’s highly successful in terms of making sales and providing quality goods and services can fail due to financial issues. Usually, this is the result of cash flow management issues. Late payments can lead to solvency and service issues. Worse, chasing down those payments requires a mind-boggling amount of time. Nearly a third of small businesses in Australia spend 8 or more hours per week pursuing late payments. When a small business owner spends a fifth of their total work time trying to gather revenue they should already have, other responsibilities inevitably get neglected. For a rookie entrepreneur, this can seem like an insurmountable challenge.
Fortunately, there are tools that franchisees can use to sidestep this entirely. Invoice factoring or financed customer payment plans can effectively allow businesses to collect their revenue in a predictable manner, while outsourcing payment collection to their financial institution.
Individual franchises often don’t have the resources to hire a marketer, or the time to try to effectively market themselves in their local area. As a result, they often rely heavily on the franchisor’s existing reputation and ongoing global marketing efforts to generate leads on their behalf. To maximise their potential, however, individual franchises need to be able to generate leads on their own while tackling their other responsibilities.
By training their franchisees in the use of a few time-saving online marketing tools, franchisors can make this feasible. An email management platform, combined with social media content management tools allows business owners to reach out to their target markets and to better connect with their existing clientele. This makes it easier to generate leads, and to gather and respond to customer feedback in a timely manner.
By taking the time to properly equip franchisees with the tools and training they need, brands can greatly improve their own long-term growth potential. You won’t just maximise profits from your existing franchisees, you’ll also develop a reputation that attracts new investors, allowing you to accelerate your growth even more.