Franchisees have gone on the record time and time again to talk about the speed at which their individual businesses succeed. And why not? At its core, a franchise is a business that has already proven itself. The formula for prosperity is there – it's up to the franchisee to apply it to their own location.
However, the relationship between a successful franchise and its overall industry does not directly translate to how well a single franchise operation does in its neck of the woods. Even billion-dollar franchises close down locations for one reason or another. Ironically, according to Finweek, a big reason why franchisees fail has to do with money management.
Don't be one of those locations. New franchisees must learn to leverage their resources without burning out. What are a few ways these business owners can hit the ground running without overspending?
"Brand success does not inherently trickle down to the franchisee."
Building up your location online
Running a franchise with a household name can be both a blessing and a curse. On the one hand, all franchisees benefit from the collective commercial consciousness associated with their brand. If a person has an excellent experience at one location, those good vibes are attributed across all others. However, as we mentioned earlier, brand success does not inherently trickle down to the franchisee. Individual locations, for the most part, must handle their own finances.
So before franchisees start spending any money on marketing, they should first do everything they can to bolster their online reputation. A 2013 BrightLocal survey found that not only do 95 percent of people search for local businesses online, but 85 percent read customer reviews and almost three-fourths of the respondents said a positive review can "make [them] trust a business more."
New franchisees should strive to improve search engine optimization, track their Web presence – including their Better Business Bureau profile – and respond as quickly and professionally as possible to the good and the not-so-good. You can't win them all, but there's no rule against trying to.
All successful businesses eventually grow in one capacity or another, whether they move to a larger location, hire a bigger staff or invest in extra equipment or snazzier uniforms.
For the fledgling franchisee with his or her head in the clouds, remember this: All in good time.
If you overwater a plant in the hopes it will spring up faster, all you'll get is a dead ficus and a clay pot full of mud. If you tell a rambunctious kid to "grow up" 10 times a day, chances are, they'll act even more childish than before. Same rules apply to franchises and startup capital. Spending more does not necessarily encourage success, but smart spending can.
The first round of personal investment in a franchise won't be the franchisee's last. Far from it. Darren Williams, owner of franchise Anago Cleaning Systems, told Entrepreneur the average franchise will need around three years before a business will truly start to pay off. It isn't a sprint, but a marathon, and how far an up-and-coming franchisee goes depends on their ability to budget efficiently over that time.
Equipment and franchise industry piece brought to you by Marlin Equipment Finance, a nationwide provider of commercial lending solutions for small and mid-size businesses. Marlin's equipment financing and loan products are offered directly to businesses, and through third party vendor programs, which include manufacturers, distributors, independent dealers and brokers in the security, food services, healthcare, information technology, office technology and telecommunications sectors.