From the July 2003 issue of Entrepreneur

Unfortunately, there's no magic potion you can create to guarantee the franchise you buy will be a big hit. But you can learn a few tricks of the trade and master the major elements that give a new franchise the strength it needs to thrive. We asked franchising insiders to share the bare essentials for being a successful franchisee in this unique economic climate.

Cash Is Still King

To make money, you need to spend money...or at least have a little. While purse strings are tightening, franchisees still need to find the funds to maintain and grow their businesses. "They have to be funded. They can't go into this on a shoestring; if they do, today's economy will not allow them to succeed," says Jerry Wilkerson, president and founder of Franchise Recruiters Ltd., a Chicago-based franchise executive search firm. "There are going to be peaks and valleys like we've never seen before. You can go for one week without any business and just get completely run over by customers the next. It's that kind of economy, and without the cash to operate, you're not going to be able to continue your system."

Looking for ways to tighten your purse strings in today's economy? Read Recession Session for money tips, tech tactics and more.

Franchisees with the means will not only weather tough economic times--they may even come away with stronger businesses. "They can [survive recessions], creating more market share for themselves when the economy recovers," Wilkerson says. "Many franchisees realize if they get into the market right now and really slug it out, when the economy starts to grind out of this recession, they will have a bigger market share and a better future."

Get the Word Out

To put it bluntly, without customers you have no business. So making the right customer base aware of your business is key. But if they don't have the resources for the traditional massive media campaigns, today's franchisees have to find new creative, inexpensive methods to reach their markets. "Franchisees must understand exactly where their customers are coming from and aim their efforts toward those neighborhoods, office buildings, hospitals or colleges. They need to be very efficient with their marketing dollars," says Mark Kaplan, chair of Great Wraps Inc., a wrap-sandwich franchise. "Right now, with things the way they are, it would be a sin to be inefficient with marketing dollars and marketing effort."

Bill and Karen Peterson have worked to find inexpensive and effective ways to market their Jupiter, Florida, American Leak Detection franchise (detecting water, drain-waste, sewer and gas leaks), a business they've owned since 1988. "We're basically trying to stay aggressive in our marketing efforts. We're not only doing the traditional marketing as far as direct mail and trade shows and participation in associations--we're also trying to focus on customer service and relationships that have an opportunity to refer business to us," explains Karen, 49.

To make sure the marketing and advertising programs you put in place benefit your business, consider the pluses and minuses of each option. "You have 50 different advertising media to choose from, and you have to decide 'Where do I spend my money? What's effective? What's not effective?'" says Keith Whipple, 34, operator of two Wing Zone franchises (makers of specialty Buffalo wings) in Charlotte, North Carolina. "Advertising can get pretty expensive pretty quickly."

Best Supporting Role

One of the major benefits of joining a franchise is that the franchisor provides you with a tested and proven operating system. While it seems obvious, following the system the franchisor has put in place is essential for a franchisee's success. That's even truer in 2003. "The more you fail to execute those key elements, the more adversely it affects your business," says Robert Tunmire, president of Glass Doctor, a glass replacement franchise. "Because of the complexity of business today, you really have to be [following the system]. In the current environment, there's no margin for error."


"Because of the complexity of business today, you really have to follow the system. In the current environment, there's no margin for error."

Kaplan agrees: "The franchisee has never had more of a responsibility to play his or her role. When times get more competitive, franchise concepts have to get stronger. They've got to perform better," he says. "We're pressing our franchisees to absolutely understand, in this environment, consumers have other options to choose from and could be hesitant to spend. We have to be excellent, and franchisees have to play their role as prescribed in their franchise agreement--not only because they're required to, but because they need to [to succeed]."

Keeping these key elements in mind can benefit not only your franchise, but also the system as a whole. "If you're going to buy a franchise, you do what the franchise does. You don't try to stray from it and do your own thing. If you want to do that, you should be an independent [business owner]," says Whipple, who's been a Wing Zone franchisee since 2001. "Consistency is one of the most important parts of a franchise, and that means with pretty much all aspects of your business."

Know Thyself

As important as maintaining the expectations of the franchisor is understanding exactly what you want from the franchise. This is a timeless truth--no matter what the state of the economy. "To be a successful franchisee, you should always have very clearly defined personal goals," Tunmire says. "A business is simply a vehicle to help you achieve the quality of life you want, and that has to start with fully understanding what you really want."

Your personality can also influence whether you're going to succeed at franchising. "Franchisees have to look in the mirror and go through a certain amount of introspection. They have to ask themselves one question: Am I willing to be part of a team, or am I looking to create something?" Kaplan says. "If they're mavericks with a need to create, to re-engineer, to express their own creativity, they should not go into franchising. These individuals make the worst franchisees possible."

Ready to start looking for a franchise? Head over to our Franchise Zone to search for information on hundreds of franchise choices.

By being part of a franchise system, you not only have the support of the franchisor but also access to an entire network of other franchisees who may be experiencing the same challenges. Asking for their help and offering your own is good for everyone. "Why else would you buy a franchise if you didn't take advantage of that benefit?" says Karen Peterson. "That's what you're paying for, and it's one of the most crucial elements of success."

Tapping into this network can save time and headaches. "If you're buying a franchise, information is available from the franchisor and all the other franchisees, whether it's about employees, marketing or technical issues," says Bill Peterson, 48. "If I have a technical question I think the franchisee in Dallas can answer, I take advantage of that."

What's the one key ingredient to franchise success in 2003? Everyone has their own ideas, but franchisee strength seems to come from a combination of a few essentials. "I wouldn't say there's one way to be a successful franchisee today. That's too narrow," says Whipple. "You have to have most of the package to make it work."