Like every business, entering into franchising comes with risks and rewards. Granted, franchising is a tad less risky than setting up your own company since the brand is already established, plenty of things still need to fall into place for a franchise to be successful.
As of 2019, more than 770,000 franchise establishments operate in the U.S., contributing around $787.5 billion to the economy. The biggest franchise brands are McDonald’s, KFC, and Marriott International, but plenty of smaller ones have cropped up. Not all of these franchises are successful, though. Below, we discuss five things that make a franchise profitable.
1. A Standardized Business Process
A franchise becomes successful because people recognize the brand, and people know the brand because of consistent services. This is why a standardized business process is essential to running a successful franchise. By establishing a set of practices in your franchise that are consistent with the practices across all outlets, customers expect and experience the same treatment in your outlet as they have in others.
2. Proper Support and Training
You know you’re on the right track to success if the franchise you bought comes with extensive training for your employees. Training cements the importance of a standard business process, letting employees learn how to provide the level of service that the franchise brand is known for. Apart from that, support from the franchisor is also critical to ensure that you have somewhere to turn to when you encounter problems running the franchise outlet.
3. An Established Brand
A marketing agency for franchise businesses helps put your franchise outlet on potential customers’ radar, but an established brand goes a long way. Investing in a franchise with a well-reputed brand means increased awareness and brand loyalty. An established also means less marketing costs and an overall reduced need for resources that you would otherwise need to spend on making a name for your business.
4. An Excellent Location
If the franchise you invested in is a business that directly caters to the public, such as a retail shop or a restaurant, location is one of the essential parts of your profitability and success. There are two sides to location—the size of the territory and the physical location you’ll be setting up in. The former is essential for evaluating whether you have a sufficient number of potential customers. The latter, meanwhile, requires careful consideration to ensure that your outlet gets plenty of traffic.
5. A Dedicated Franchisor
The more help you can get from your franchisor, the better. This is the person who started the business and made it successful, so much so that franchising has become a viable venture. This means they have first-hand knowledge of running the business and doing it most profitably, so their support and guidance are invaluable.
A lot of people buy a franchise to run their own business but lessen the risks involved. By recognizing the elements of profitability above, you can further ensure the success of your franchise outlet.