7 Qualities of the Best Franchises
Franchising continues to grow year-on-year and there seem to be ever more choices and opportunities in more and more segmented markets. How do you spot the right opportunity? We’ve seen our fair share of franchises over the years so we’ve put together a list of the qualities we consistently see in the best of them.
Strong Brand Presence
The strongest brands have a great name, visibility, and buzz.
A great name instantly indicates what you do. If you, as a stranger to a brand, respond with, “What does that do/mean?” to a brand name, that’s a reaction plenty of other people will have, and as Tom Brady says, “if you’re explaining, you’re losing.”
The best names are worthless if they aren’t backed up by visibility: where is an example of the franchise running? Is it creating a buzz that people are talking about? If it’s been established for a while, do people still speak with pleasure and excitement when talking about the brand?
Proven & Profitable Local Marketing
The key here is “proven and profitable.” You can ask for examples of current marketing materials to see how well done they are. You can also call and ask franchisees how the marketing works and what sort of return they see on those local marketing investments.
Operating Manual & Training
While you’re unlikely to be given a manual or be allowed to sit in franchisee training until you’ve committed, this is yet another area in which you can simply ask franchisees:
- How thorough was the training?
- Did you feel prepared to run your business afterwards?
- How is the ongoing training?
- How detailed is the manual?
- What online resources do you have to complement the training and manual?
“Use a proven system” is one of the major bragging points of franchises and the backbone of any system is the training.
Friendly Corporate Culture & Communication
This is one of the shadow indications of what franchise life will be like. How do corporate staff interact with you on the phone? What’s the feeling like at Discovery Day? What’s the CEO like? What’s the overall spirit at the corporate level? Remember that this will directly affect your experience (and profitability) as a franchisee.
As with many of these qualities, ask the franchisees for what their experience has been like.
Many franchisees don’t realize that it’s important to have a forum for their voices to be heard that stands apart from official company channels. A franchise association that is recognized and approved of by the franchisor is an important quality of the best franchises.
Such associations offer a space to discuss brand and system matters while minimizing the distracting rabbit holes of individual disputes, which should always be between franchisor and franchisee.
A simple question to get insight into the standards of a franchisor is, “Have you ever turned anyone down, and if so, why?” A “Yes” answer isn’t required here, but it is reassuring to get a sense that standards beyond net worth and financial capacity matter to the brand, because every franchisee in the system, in a way, can affect you. You don’t need to demand the tougher-than-Harvard-admission acceptance rates of a Chick-Fil-A, but strong standards do matter.
This is a principle universally accepted by franchisors but uneven in its application to franchisees. Don’t rule out wheeling and dealing with current franchisees who have locations that are more geographically desirable to you. Just because a territory is “closed” doesn’t mean that deals can’t be cut.
Are you considering buying a franchise or a business run with the reliability of a franchise? We might have some great fits for your personality and finances. Give us a call.