There are a number of well-known franchised businesses that are highly successful in the global marketplace, such as McDonald's and Subway. There are also hundreds of other highly successful franchise businesses that escape the notice of most people. But whether large, small or somewhere in between, successful franchises have three things in common: good unit economics, good systems, and a great brand identity. If you want to create a successful business franchise, it will need those three characteristics.
Instructions
1. Establish good unit economics, ensuring the ability of each unit in the franchise to turn a profit. Successful franchisors carefully plan store development and new product roll-outs to improve unit economics. The easier it is for franchisees to turn a profit in their business, the more successful the franchise will become. Non-profitable units can drag everyone down.
2. Develop a system. Make sure that the fundamental business concept is sound, business processes are efficient and, most importantly, that the concept and practices can be easily replicated from one unit to another. For efficient day-to-day operations, every business needs simple, smart business processes--how employees work, supplies are ordered, sales are reported, customers are treated, and so on. What you want is to be able to hand these proven methodologies over to the franchisees on a silver platter. Successful franchisors spend a lot of time developing superior systems. Without them, the franchise will not succeed.
3. Establish clear brand identity. A trademark is part of the legal definition of a franchise. Consumers look for name brands and logos they recognize and value; for your franchise to be successful you must build value and recognition in your brand. McDonald's golden arches are known around the world, and that brand value is what makes McDonald's successful.
4. Make it relatively easy for franchisees to opt into your business. It must be an affordable investment. If potential franchisees can't afford to buy in, or find the financing necessary, you will struggle. Investment affordability is directly related to good unit economics and proven business systems. The easier it is to make the case that a business will be successful, the easier it will be for franchisees to reach into their own pockets or for lending institutions to agree to a business loan.
