Are you considering buying a franchise business? Before investing in any venture, it is essential to understand what kind of support you can expect from the franchisor.
The franchise business model is an exciting and popular way to become an entrepreneur without creating a brand from scratch. However, franchising does involve making risky decisions about how much financial and operational responsibility you can take on. The success or failure of your business depends, in part, on the type of support provided by the franchisor.
Franchisees need to evaluate the level of support offered by potential franchisors before entering into an agreement. This article will discuss the types of support that should be expected from a successful and reliable franchisor, including initial training and set-up, and ongoing training and support.
Why is the support of the franchisor important?
The primary objective of franchisors is to ensure that franchisees have the resources and tools necessary for success. This support comes in many forms, including financial, marketing and training assistance. A franchisor’s goal is that the franchise is profitable, and they are there to ensure that you, the franchisee, have what you need to make that happen.
Franchisees typically invest a significant amount of money to buy into a franchise system and rely on the franchisor’s expertise and resources to help them launch and operate their business. Without the support of the franchisor, franchisees may struggle to establish a profitable business, face legal or financial challenges, or struggle to keep up with industry trends and customer demands.
How does a franchisor support a franchisee?
There are lots of ways that a franchisor can support a franchisee. Let’s take a look at each of these in more detail.
1) Initial set-up
One of the most important aspects of setting up a successful franchise is getting the location right. Set it up in an inconvenient location, and you’ll struggle to get new customers in the door. Most franchisors can help with this aspect. They typically have well-established processes for new franchise locations, which is based on data analysis and market research that can help them identify locations with promise.
Another positive a franchisor can bring to the set-up is lease negotiations. As a pre-established brand, franchisors may have pre-negotiated lease agreements in place to get you better deals. They can also give you templates for lease agreements that can be customized, saving you the time and hassle of having to research this yourself.
2) Marketing assistance
Marketing support for franchisees is critical, especially if the franchisee has no marketing background or experience. All franchisors will supply basic training along with resources to make sure franchisees get up to speed quickly. Things that franchisees can expect include:
- Marketing plan
- Marketing materials
- Marketing programs
- Email marketing
- Advertising plan
- Marketing strategy
- Campaign advice
- Customer base information
Whether this support continues depends on each franchise, so it’s worth asking early on and figuring out how important it is for you. Some franchisors will continue to offer support for an ongoing fee to cover things like national advertising campaigns and Public Relations, whereas others will leave all the marketing efforts up to individual franchisees.
3) Operational support
Franchisors provide franchisees with valuable operational guidance to ensure their success too. By offering well-defined operating procedures, documented processes and best practices, franchisors can help franchisees overcome the inherent risks in running their own business. Franchisees can also help with establishing supply chains, setting up Human Resources (if required), and handing out operating manuals. Franchisees may also benefit from the collective wisdom of other franchise owners, who can pass down proven methods for managing a successful franchise.
4) Financial resources
Franchisors may offer financial support to franchisees in several ways. One common form of financial support is providing access to financing options or helping franchisees secure loans. Some franchisors have established relationships with financial institutions, which can help simplify the loan application process for franchisees. In addition, some franchisors may offer payment plans to help franchisees with initial franchise fees or other startup costs.
Franchisors may also provide ongoing financial guidance to help franchisees manage their finances and maximize profitability. This may include assistance with budgeting, financial reporting, and other financial tasks. Additionally, some franchisors offer financial incentives, such as volume discounts on supplies or reduced royalty fees for franchisees who meet certain performance benchmarks.
How to find out what level of support you’ll get
It’s important to note that the level of support offered by franchisors can vary significantly depending on the specific franchise and the franchisor’s policies. Franchisees should carefully review their franchise agreements to understand the obligations and the amount of support that will be provided by the franchisor before making any investment.
- Review the franchising agreement in detail. Everything will be explained in detail in your franchise agreement. Make sure to read it carefully.
- Ask the franchisor directly. Still not sure about something? Ask the franchisor directly. You’ll be going into business with them, so it’s important to get your relationship off to a good start and make sure you’re 100% clear on everything.
- Ask fellow franchisees. Remember, there are other franchisees who gone through exactly the same process. Find out from them what the support function looks like and any other questions you feel they can answer to give you a better and honest understanding of how the franchise agreement works in practice.
The franchising model is a great one for any aspiring business owner. But the support of the franchisor is an essential part of owning a successful and reliable franchise business. By understanding the different forms of support that a franchisor can offer, you can make sure that you have the resources and guidance you need to succeed. From initial set-up to continual operational and financial guidance, franchisors can help to ensure that your business is successful and profitable.
So what are you waiting for? Take ownership of your future and make your franchising dreams come true!