If your definition of success is becoming filthy rich, opening up a franchise business could get you there. And it may not.
Although franchise ownership can provide a proven business model with instant brand awareness, it doesn't always beget wealth. For that kind of success, business owners need to not only start a franchise that's in demand with consumers, they need to employ strong people skills, and, of course, put in the hours learning everything about the company.
It may be tough to turn a startup-franchise business into big bucks, but it's not impossible. Here are the three keys to striking franchise gold.
1. Cultivate your interpersonal skills. Not everyone is cut out to be a franchisee. The best and most successful tend to have a keen work ethic and stellar people skills. But even if you're lacking in these departments, with a little practice and a lot of patience you can improve. Here are a few tips:
- Lead by example. Do whatever it takes to get the job done -- willingly and with an enthusiastic attitude -- and employees will often follow suit.
- Put people first. Create loyalty, value and trust through your interaction with employees and customers.
- Seek out and follow advice. Take advantage of best practices developed by others rather than re-inventing the wheel at every opportunity.
2. Find the right franchise. Franchise opportunities come in all shapes and sizes. To find the best, would-be franchisees might consider the following steps:
- Know yourself. Determine exactly what results you want to accomplish in business. To help, complete a personal inventory of your strengths and weaknesses and calculate the amount of financial resources you have available to start a business.
- Review disclosure documents. Take the time to carefully review the franchise disclosure, or FDD, document. In addition to earnings claims and financial statements, consider any litigation or bankruptcy information in the document. You'll want to enter into an unencumbered franchise system if possible.
- Talk to existing franchisees. Ideally, you'll want to see a track record of excellence from franchisees that have gone before you. Has the franchisor managed to resolve disputes fairly? Can current franchisees verify the company's earnings claims? Are they satisfied?
- Verify values and culture. Spend time with the employees and officers of the franchise company to make sure they have the same values and priorities as you do.
- Take calculated risks. Successful franchisees aren't typically gamblers -- they want any risk they take to be as small and carefully controlled as possible.
3. Follow the rules. Every great franchise opportunity has a tested and proven system of operations that they use to maximize success. In order to get the most out of the system, you'll need to do the following:
- Put in the time. Take advantage of every training opportunity. That investment in learning the franchise system -- including a company's best practices -- can pay huge dividends in the form of happy customers.
- Practice, practice, practice. Execute the franchisor's systems as precisely as possible. Then, review and evaluate your performance regularly to ensure those best practices become the standard.
- Don't innovate too much. Resist the urge to "improve" the franchisor's system by making changes. This temptation almost always reduces the chance for a new franchisee to become successful.
- Help others. Once you've established a successful operation, take some time and provide assistance to other franchisees. Helping others can not only make you feel good, you might even benefit financially. Perhaps you'll learn about a new tool or strategy you can implement in your own business, or you could land a referral or two down the road.