Strong Business Infrastructures Create Profitable Franchises

Building Blocks: Strong Business Infrastructures Create Profitable Franchises | Nate Riordan | Franchise Attorney

Franchisors trying to expand and allow their franchisees more opportunity for growth and increased market share must have a solid infrastructure in place. A strong infrastructure will provide franchisees with the tools needed to effectively execute the business model and present a consistent brand image for consumers at every stage of interaction. Let’s take a look at the foundational elements every franchise needs for long-term and national/international success.

A Strong and Consistent Brand

Every franchise needs a strong brand that distinguishes itself from competitors and that is consistently applied throughout the business. Good branding increases customer loyalty and reduces market confusion while keeping down costs for franchisees. As a foundational practice, franchises should develop a unique logo and go through all the necessary legal steps to ensure that no other business can copy it and fraudulently sell counterfeit products or services under the same or similar logo. Strong branding will also help protect the franchisee’s investment by increasing the loyalty of consumers and making it easy to recognize the company.

Franchise Support

Franchisors with strong support systems can improve franchisee success rates. Support such as new product development, public relations initiatives, advertising assistance, approved suppliers list, and billing and collections can go a long way in helping the franchisee run their business in a systematic and effective way. Franchisees can also benefit from onsite visits where franchise consultants advise them about issues that can only be seen via an in-person experience. Here are some specific examples of how franchise support infrastructure can help franchisees.

  • Provide ad copy for advertising campaigns. No matter how strong a brand is, every franchise will need to participate in ongoing advertising campaigns to raise awareness about their business.
  • Provide maintenance support for technology systems used in the franchise. For example, a travel franchise might receive technical support for their reservations system.
  • Provide payroll services to the franchisee. An experienced payroll team can make employee payment and payroll taxes easy to handle.

Training

Strong franchisors also provide ample training opportunities for franchisees. Good franchisee training systems include the following key elements:

  • An operations manual. The operations manual is like a textbook that will help ensure quality control for all franchise units. Good operations manuals will instruct the franchisee on how to operate the franchise even if they have zero experience. This ensures that franchisees don’t operate on assumptions and that they keep things consistent across the brand. An operations manual will also help enforce system standards since there will be a quantifiable way to measure quality.
  • Headquarters training. To further ensure brand consistency and quality, every franchisee should go through training at the prototype franchise. During their headquarters training, franchisees can gain a deeper understanding of the brand and culture and make connections with headquarters personnel.
  • Onsite training. In addition to training at the headquarters, franchisees should train onsite and that training should be tailored to their level of experience and knowledge. Onsite trainings should be adapted to the location and they should focus on improving the success of the franchisee in their day-to-day operations.

As a franchisee becomes acclimated to a franchisor’s system via training, it can be easy to forget key details, this is why having onsite support during the first week of operations is key to ensuring a successful opening.

Legal Services

Even if a franchisee does everything by the book, it’s almost inevitable that they will face legal issues or have questions. It’s important that a franchisor provide some legal support for their franchisees so that the advice they are getting comes from attorneys who understand the franchise business and the franchisor’s brand specifically. Providing some type of legal support is critical to reducing potential liability for the franchisee and the entire brand. When it comes to legal issues, an ounce of prevention really is worth more than a pound of cure.

Vetted Suppliers

One of the powerful ways that franchisors support franchisees is through their supplier infrastructure. By providing a list of vetted suppliers to franchisees, they can leverage their collective purchasing power to get discounts on products, supplies, and services. These discounts allow the franchises to offer better prices and increase their profit margin.

Professional Services

For franchisees who want to fully leverage the support infrastructure provided by the franchisor, bringing on an experienced consultant may be a smart choice. Working with experienced consultants can really benefit new franchisees who may want to avoid some of the common pitfalls they may not notice because of their lack of experience.

Powerful Systems

Franchisors who have strong systems that they constantly improve are better positioned to help franchisees expand and become more profitable. For franchisees, it’s important to make sure that a franchisor’s systems are actually scalable. The easiest way to do this is by watching how effectively other franchisees have expanded with the brand. But in the case of newer franchises, franchisees will need to do a lot of research and have a basic understanding of how the best systems work. There are two important things to remember about systems:

  1. Good systems are scalable.
    You can easily have two people working on the system or 200.
  2. Good systems are relatively easy to use.
    Good systems should be simple and just about anyone should be able to learn to use it.

If a system has both of these characteristics it probably has a very strong foundation.

The success of any franchise business is depending heavily on the business infrastructure that has been created.

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