Starting a business is hard work. A lot of trial and error usually happens before a business becomes profitable. Mistakes cost money, so shortening the learning curve is ideal. By becoming part of a franchise system, you can significantly shorten this inevitable learning curve and reach your goals at a faster pace.
A franchisor has already gone through the trial and error and created a viable and profitable business formula. They provide a road map on how to succeed with their specific model, transferring their invaluable knowledge to their franchisees. Benefiting from the franchisor’s experience means less guesswork than when starting from scratch.
When deciding whether to invest in a particular business model, consider how effectively the franchisor has honed their system. A fine-tuned business model translates into an accelerated path toward profitability.
Here are some indicators of a developed and optimized offering:
- Time-tested: Look at how long the franchisor has been around. What is their track record? Have they stood the test of time?
- A high continuity rate: A high continuity rate indicates the franchise system is strong. It means the model is sustainable and franchisees are succeeding.
- A rigorous selection process: A franchise’s selection process should ensure the model is a good match for the candidate, not just about collecting a franchise fee. A rigorous selection process means the brand has determined what factors and characteristics have proven to contribute to success within their franchise system.
- Company-owned stores: Company-owned stores allow the franchisor to test new products and services before rolling them out system-wide. Processes, systems and products are tested and optimized by the time they come to franchisees. You can see how many company-owned stores a brand has in Item 20 of its Franchise Disclosure Document.
- Strong support systems: Being part of a franchise system means you aren’t in business alone. What sort of training and support does the brand provide? Is the support ongoing? A strong support system shows the franchisor has identified franchisee pain points and secured resources to help guide them.
- A Franchisee Advisory Council: A council comprised of a cross-section of its franchisees shows the franchisor is actively soliciting feedback and diligently working to maintain open communication with its network.
Talking to current and past franchisees in the system provides valuable insight about a business model’s learning curve. Ask them about the training and support they received and how long it took for them to break even. Ask if they would do it again. Don’t just talk to franchisees who have done well with the model, talk to those who have failed as well. Listen to their experience and see if their troubles were circumstantial or if the system itself was the trouble. Franchisee failure can often be attributed to not sticking to the system.
Once becoming a franchisee, no matter what franchise you decide, you will have to put in the work. Approach your new business with realistic expectations and a willingness to learn. Above all, if you have chosen well, following the system will help shorten the learning curve and help you reach your personal and financial goals faster.