When people think about franchises, they often think about fast food chains or sports teams. There are many more franchises out there, however, and you would be surprised by the number of franchises that you interact with on a daily basis. So how does a franchise work?
Franchises are businesses where an individual or group is given the right to carry out certain commercial activities. Take McDonald’s, for example, one of the biggest franchises in the world. If you wish to open your own McDonald’s, you first have to have this space available to run one. Once you have space, you contact the corporation and express interest in opening your franchise. For a price, they will allow you to use their name and products at your location to make money. What that price is will be agreed upon within negotiations.
While it is costly, there are definitely ways that you can make large amounts of money from your franchise. There are secrets to the trade that you can utilize to ensure that you not only get to the top of sales but stay there. Here are some of the secrets to success when running a franchise.
Business Smarts
For a franchise, you have to know how to run a business and how to make money. This will play a huge factor in not only deciding what franchise you want to become a part of but where you want to locate it as well. When you compare leading franchise companies from McDonald’s, Starbucks to Swarovski, and pizza franchises, you’ll get an idea of where you stand to make the most money. If there are three of their stores already in your location, obviously you wouldn’t want to open more of the same. From there, you can begin to make a decision about the type of franchise that you want to create.
Along with this, you have to know what your market is like in the area that you are planning to create the franchise. If the location is oversaturated, you can expect not many people to come to your location. You do not want to end up splitting your business with several different companies. Once again, there are services out there that can help you see what is in your area and will also let you see how those companies are doing.
You also need to be careful if you plan on being the first unique business to a location. While there is potential for a huge amount of earnings, there also has to be reasons why no one else has gone there before. Being able to forecast your profits accurately is essential in moments like this. Having the smarts to know where to put your business and what franchise to choose is key for success.
The Perfect Amount of Employees
This sounds like it is easy to achieve, but in fact, it is much harder than you think. The top 7 franchises have been able to master this, however, and this allows them to maximise the amount of profit they make. If you hire too few employees, you are unable to keep up with the amount of work provided. Sure, you are able to save money on wages, but the amount of money you have lost in business is far greater than what you have saved.
On the opposite end, if you hire too many employees, you find yourself in another bad position. Although you can pump out work extremely quickly, there simply isn’t enough work to go around and keep people busy. This will result in plenty of downtimes where your employees are doing nothing but getting paid for it.
So, where is the sweet spot for workers? You might think it is perfectly in the middle where the workload is equal to the number of workers that you have. On paper, that is the correct answer but it never works out that way. People will tire out and will be unable to work at maximum efficiency throughout the whole day. You also have to account for breaks and people possibly feeling unwell.
Therefore, the top franchises will always determine the perfect amount of workers and then add one to three more to it. This gives them a safety net without costing them too much money. It can take some time to determine this number as well. See how your business is operating and make decisions from there. All franchises will know how many employees they have to staff on any given day.
Companies Are Selective with Awarded Franchises
Finally, think about some of the franchises you have been to. While you might have encountered a few hiccups here and there, for the most part, the service and atmosphere were good. This is because these companies are very selective about who they choose to award their franchises.
It is not simply good enough to have the money to buy one. You have to demonstrate that you are capable of running a business and living up to their company model. Companies do not want one bad franchise to jeopardize their reputation and their name. This is what makes them so successful. They make sure to only award the best people with the highest potential a right to their franchise.
Therefore, if you want to create a franchise and have success with it, you have to show to them that you can not only create an adequate company to their standard, but you also have the drive to go above and beyond. By demonstrating initiative, not only will both you and the company have success, but you open yourself up to possible promotions into the corporate world later on also. Make sure to bring in a positive attitude and a business-minded approach if you want to have success with a franchise.
By following all of these tips, you should be on your way towards making money with your franchise. Remember that with any business, when you first open up, things might be incredibly slow. Hang in there as soon enough things will be able to pay for themselves. What franchise are you planning on opening?
