You’ve just purchased a franchise. Congratulations! Your new business is just part of a thriving economic sector with an estimated output of $860 billion. Now, you need to make critical decisions about where your franchise should be located, what should be part of your business plan, whom you should hire, and how you should market your business.
While you’re probably very excited, you could feel overwhelmed or stressed about everything you’ll need to learn about franchise management. Your knowledge is key to your long-term success and eventual expansion.
Not to worry. We’ll provide an overview of the basics and some helpful tips you can use to run a successful franchise post-purchase.
Key Information
- Location: Finding the right spot for your franchise is critical and could be responsible for your potential success or failure.
- Marketing: An effective marketing strategy ensures that clients know who you are, where you’re located, and why you’re a good choice.
- Business basics: During the first year, you’ll need to tackle small (but important) tasks such as filing paperwork, creating tax accounts, and preparing a business budget.
- Hiring: Your franchise is only as good as your employees. Finding and retaining the right staff is important, but it’s not always easy.
- Industry knowledge: Understanding your industry and ideal customer will help you build a strong brand, so you can expand quickly.
Business Basics You Should Know
Once you’ve signed your franchise agreement, it’s time to dig into the basics of management and corporate structure. The decisions you make here can reverberate for years, so it’s important to proceed with caution. Here’s what you need to know.
Location Is Key
The research is clear: There’s a strong connection between the location of a business and the profit it generates. Choose the wrong spot, and it could have significant repercussions on the amount of money in your corporate bank account.
While the characteristics of an ideal location can vary dramatically from one industry to another, some general traits stay the same. When choosing your location, consider factors such as the following:
- The potential for foot traffic
- The demographics of the buyers you hope to serve
- The proximity to your competitors
- The accessibility of your location
Legal & Financial Considerations
Before you open for business, ensure that you’re on a solid legal footing. Registration is a good place to start, and as the U.S. Small Business Administration explains, that can be as simple as registering with both state and local governments.
With that step complete, tackle tasks such as understanding your potential tax payments and complying with your franchise agreement. Tapping experts, including lawyers and accountants, can give you peace of mind and ensure you’ve handled everything correctly.
Building an Effective Business Plan
Researchers say close to 17% of businesses don’t have a formal plan. Don’t be one of them. A structured business plan, designed before you serve your first customer, can streamline your processes and protect you from ongoing pitfalls.
Your business plan should include items such as the following:
- Financial predictions
- Market analysis
- Competitive insights
- Your unique spin on the franchise promise
Set clear performance indicators, so you can track your progress over time and adjust if your projections weren’t accurate. Your accounting, marketing, and sales teams should have access to these numbers and be prepared to report to you regularly.
Marketing Your Franchise Is Crucial
More than 65% of businesses have no marketing plan. The majority make things up as they go along. However, a solid plan can help you strategize and segment, so you spend your precious marketing budget wisely.
Most franchise companies typically have guidelines and processes in place to help you get started. Some even develop assets (like photos, logos, and customizable graphics) you can put to good use. However, you’ll still need to plan.
Most consumers search for goods and services with their phones and computers. Having a solid digital presence is crucial in this environment. The following tools may be useful as you spread the word about your business:
- Email marketing: Tools like Mailchimp, Loops, and MailerLite allow you to craft customized messages and send them to people who agreed to hear from you. Coupons, details about special offers, and behind-the-scenes notes could all help drive customers to visit.
- Social media: Sites like Facebook, TikTok, Instagram, and X allow you to talk to customers directly. These sites can also work like mini search engines and allow you to highlight your location and open hours.
- Website (including SEO): Tools like WordPress and Wix allow you to create a website in minutes, filled with information about your location and specific benefits. Filling your site with search-friendly terms that relate to your business and location can ensure it shows up.
- Location tools: Google My Business, Yelp, and Trip Advisor allow you to list your business, your location, and your open hours. In return, customers can review your location and highlight why it’s better than the rest.
A solid digital marketing plan can help you grow your business, share news about your promotions, build excitement about your specials, and more.
Staffing, Hiring & Training Impacts to Your Bottom Line
Hiring is an essential part of setting the foundation of your business. The right people can help you grow your location into something special, and it allows you to consider expansion in time.
Researchers say an estimated 8.7 million people work within the franchise sector. They hold a variety of different roles, including the following:
- Operations: Staff in this department tackle the daily functions of your business.
- Marketing: These staffers spread the word about who you are and why you’re worth the time and money.
- Management: People in these roles supervise other staff, and they may make hiring decisions too
Using franchiser guidelines is an important part of the hiring process, but successful business people understand how to find great talent. Tools like LinkedIn, Indeed, and other digital assets can help you list your open positions and recruit quickly.
While you might get flooded with applications from a digital advertisement, don’t hire someone who looks good on paper. Follow up with an interview, and ensure that you check references. Hiring the wrong person could derail your profitability and success.
Daily Operations & Workflow
To ensure that everything works well in your franchise—day in and day out—you need a qualified operations manager. That person should set up appropriate workflows to alleviate friction and unexpected crises.
An operation manager’s job is vast and can involve things like inventory management, developing key performance metrics, and supervising staff. Their responsibilities can cover everything from accounting to facilities management to quality control and more.
This person should be the first one you hire. Together, you’ll set up your franchise for success and build out your team accordingly.
Budgeting and Cash Flow
A solid budget can help you prepare for (as well as handle) the unexpected expenses that tend to crop up within the first year of your business. A budget can also help you avoid the following common pitfalls that impact new franchise managers, such as the following:
- Underestimating startup costs
- Misunderstanding franchise fees and royalties
- Failure to separate business and personal accounts
- Lack of savings for unexpected expenses
Budget planning is also important for your long-term goals. You’ll need funds for marketing and reinvestment, as costs often come up unexpectedly.
Planning for Your Expansion
A solid franchise management plan can help your first location succeed. It can also help you open your doors to serve more people in new areas.
For example, a solid marketing plan can help you drum up so much business that you need more locations. And a solid staffing plan can help you find the right people to work in those new spots.
The tips and strategies we’ve shared here will make your expansion easier.
Helpful Tips to Succeed in Franchise Management
The following tips can help you achieve greatness as a franchise owner. The basics to consider in your first year include the following:
- Find your voice. Balance brand consistency with the flair that makes your location different than the rest.
- Know the details. Read your franchise agreement carefully and ask for clarification if anything seems unclear.
- Keep it local. Know your very specific audience and ensure you can keep them happy and satisfied.
- Get the right people. Prioritize hiring and staff onboarding, so you don’t have to do all the work yourself.
- Get a plan. Ensure that you have a business plan that includes financial goals.
- Make connections. Engage with your community and tap into all network opportunities available to you.
- Learn from peers. Ask other franchise owners to share what’s worked for them.
- Use technology. A strong digital presence can be a dominant sales driver.
- Watch the market. Understand the trends and what your competitors are doing.
While you may feel overwhelmed by the amount you must learn about franchise management, you can do it. Plan, lean into your strengths, and believe in your success. You can make your franchise a success.
References
Franchising in the U.S.: Statistics and Facts. (January 2024). Statista.
The Effect of Business Location on Sales Result in the Traditional Market. (September 2021). Indonesian Interdisciplinary Journal of Sharia Economics.
Register Your Business. (February 2024). U.S. Small Business Administration.
16.8% of the Surveyed Businesses Do Not Have a Business Plan Yet. (November 2023). Yahoo Finance.
Two Thirds of SMEs Have No Marketing Plan. (January 2024). Marketing Tech.
Operations Manager Career. Western Governors University.
A Preliminary Study: Exploring Franchising Growth Factors of Franchisor and Franchisee. (September 2022). Journal of Open Innovation: Technology, Market, and Complexity.
It Takes Two to Tango: A Taxonomy of Franchise Success Determinants. (April 2023). International Journal of Retail & Distribution Management.