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The DNA of a Single-Unit Franchisee - Episode 13

Erin Carpenter
Jun 5, 2018 7:00:00 AM

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Angela Coté is an expert in the world of franchising who’s experienced it all - being a franchisor, franchisee, field operations manager, and now a consultant helping franchisors achieve exponential growth and profitability.

Over the years, Angela has noticed that there are ten qualities that the most successful franchisees she’s seen share, no matter the brand or industry. She calls these foundational characteristics  “the DNA of a franchisee.”

Here are the ten qualities that make up the DNA of a franchisee:

1. A Franchisee Must Be Financially Prepared

Financial abilityIf you’ve considered buying a franchise, you probably know you’ll have to pay a hefty fee up front. But, have you considered the additional working capital you’ll need to get your new business off the ground?

Although franchisees are buying into proven, systematized concepts, they are still building brand new businesses and the cash flow won’t start right away. It may seem obvious, but it is often very helpful to have a spouse or partner with a steady income to help offset this time of initial growth.

If you don’t have the operating capital, you’ll feel cash-strapped and trapped in a brand with a long-term contract. This leads to high pressure and a higher chance of failure. In fact, Dan Durney believes that undercapitalization is the #1 reason franchises fail.

So, how do you know if you have the required capital? Ask your franchisor for details. They should be able to provide you with a clear picture of the working capital you’ll need for the first six months to a year, as well as the typical timeframe it takes for a franchisee to break even.

Franchisors are eager to find franchisees who seem like a good fit for their brand values-wise, but the most successful franchisees also have the financial capacity so make sure you have enough working capital to run the business until it’s cash flow positive before buying into a concept.

2. Successful Franchisees are Systems-Oriented

Systems-orientedFranchising is system-based, so the franchisees who find the most success are systems-oriented people who are good at following processes and direction.

Some of the best franchisees are veterans because they’re used to following systems. In fact, many franchisors offer a discounted franchise fee for veterans for this reason.

Of course, it’s okay to question the system sometimes, but as a general rule franchising is better for people who like to follow the rules.

If you are the type of person who’s used to modifying systems and who likes forging your own path, franchising may not be a good fit for you.

3. A Touch of Entrepreneurialism is Helpful for Franchisees

Entrepreneurial SpiritOn the flip side, you will still be building a business from the ground up as a franchisee, so it is good to have a touch of entrepreneurialism.

Being a little creative is a good thing! There may be a modification you realize to make your business more efficient or community-oriented.

Think you have more than a touch of entrepreneurialism but are still considering franchise ownership? You will probably find the most success and satisfaction in a brand with fewer than 10 units.

When a brand is new, there is room to be more entrepreneurial. There’s more wiggle room because everything hasn’t been systematized yet, so you can have a say in creating the brand’s systems and processes.

4. Brand Loyalty & Passion for the Brand are Keys to Success

Passion for the BrandYou have to have loyalty and passion for your brand in order to be successful as a franchisee. You sign a long-term contract, so if you’re not passionate about what you’re doing, you will probably feel frustrated and trapped.

This doesn’t mean you have to be passionate about the service being offered. You could be passionate about the founder’s inspirational story, or passionate about the brand’s innovative ways of offering its products and services. No matter what, the brand needs to get you excited.

There are generally two types of people who decide to buy a franchise:

  1. People who are really passionate about the brand, and then realize that passion could become a business opportunity.
  2. People who think they want to be a franchisee, and then go brand shopping.

People who fall into the first category already have that excitement and brand loyalty, so they’re generally set in this category.

But, what if you are in the second category? What should you look for to determine whether a brand has what it takes to really motivate and excite you?

First, you’ll want to align with the brand overall. Look under the hood, dig deep during validation, and get as much information as possible.

You want to be excited about everything the brand is doing - everything from how they position themselves vs. their competition, to how they’re involved in their communities. It is critical you look at the overall picture before making a buying decision.

5. Franchisees Must Have Patience

Patience is a virtue for franchiseesThis is a big one, especially in more established, larger franchises. The larger a franchise is, the longer it takes for things to move through the system.

As a franchisee, you may think you have a great idea to improve the system. When this happens, you will usually suggest it through your franchisor’s portal. But, things won’t change over night, no matter how great your idea is. This requires a lot of patience.

Like any large system, there’s a process to evaluating modifications. While it can be difficult, you need to trust that the brand is looking out for your best interest. Practice patience instead of automatically fighting back against the system when the change you need to see isn’t happening fast enough.

Of course, there are some exceptions and times you will want to fight harder for what you want. In these cases, it’s best to go through a neutral third party who understands the complex relationship between franchisees and franchisors (someone like Angela). This person should be able help explain each person’s side to the other, and help the two come to an agreement.

6. A Franchisee Needs to Have Leadership Skills

Leadership SkillsThere are so many aspects to opening a business, but one that many franchisees overlook at first is the fact that they’ll need to hire staff.

Often, these first hires are entry-level, like cashiers or in-store sales associates. While there are some wonderful entry-level workers, these types of position tend to have lots of turnover and less brand loyalty than those higher up.

It takes a superstar leader to motivate and retain entry-level employees earning entry-level wages, so the ideal franchisee has some natural leadership ability. If leadership comes naturally to you, you’ll probably have a much smoother ride.

Don’t give up hope if leadership is more of a challenge for you.

It’s the franchisor’s responsibility to offer leadership coaching and/or professional development workshops. This could be done through their business managers or coaches, or outside third parties. At the end of the day, they want their franchisees to be successful, so they should do whatever it takes to make sure they can learn the necessary leadership skills.

7. The Best Franchisees are Team-Oriented

Franchisees must be Team-OrientedOne of the greatest benefits of being a franchisee is the built-in network (or team) you immediately become a part of. If you’re not team oriented, you’re not going to be inclined to leverage that network.

Your team of fellow franchisees is an incredible wealth of knowledge and experience. If you’re not a team player and try to go it alone, and will likely run into more challenges.

Franchisors should encourage franchisees to connect one-on-one in different ways, and many franchisors facilitate franchisee collaboration. Emerging brands typically have all of their franchisees in one general geographical location, so they can set up regular, in-person meetings. Those whose franchisees are further from each other can do quarterly video conferences.

Larger brands may have franchise advisory councils, where franchisees are elected to represent their geographic regions. The person elected to the council will bring the voices of the franchisees in their region (generally 10-15 locations) to their regular meetings with the head office representative, then feedback goes directly to the brand’s headquarters.

Angela’s absolute favorite way franchisors can facilitate franchisee collaboration is through franchise performance groups, which are like a mastermind for franchisees within a single brand.

These are not for the faint of heart. Members come to quarterly meetings, open their books, and share their successes and failures. You must be willing to be vulnerable to participate because it requires being 100% transparent and open with your peers. This is ideal for franchisees who have room for better performance and the drive to improve.

While this is challenging for many people, it is an incredible way to get new ideas to improve your business, increase revenue, and refine efficiencies. Angela has seen franchisees come back from their performance group meeting with a $20,000 increase in revenue because of an idea shared by a fellow franchisee.

The more team-oriented you are, the more likely you are to participate in a group like this, and the better you’ll be able to run your business.

8. Franchises Must Be Sales-Oriented

Franchisee SalesIt’s a common misconception that buying a franchise is simple. You open, and people just come.

This is so far from the truth. You can’t just sit back and wait. You need to get out in your local community to build business. It’s not enough to pay into your franchisor’s ad fund and depend on their advertising.

The best franchisees understand how to get sales and have the guts to go out there and do it.

If this feels overwhelming, communicate this to your franchisor during the recruitment process. Learn the sales support they offer, and make sure you’re comfortable with it.

9. The Most Successful Franchisees are Community-Oriented

Angela Greater Victoria Chamber AwardsOne of the keys to franchise success is partnership with your community. It is essential that franchisees build their business in the community. Go to local events, partner with a charity, and make those local connections.

One of the benefits of a franchise is that you have the opportunity to connect with your local media (radio, tv, newspapers, etc.) to share your business with people in your community. This PR can be very powerful.

“The most successful franchisees are the ones that are community-oriented, sales-oriented, and team-oriented,” says Angela.

10. Grit is a Key Skill for Franchisees

Grit and PerseverenceAnother franchising myth is that franchises are turnkey businesses. This just isn’t true. As a franchisee, you’re still a business owner and you’re the one responsible for whatever happens in that business. This takes hard work.

The best franchisees have the grit and endurance it takes to work hard and build their businesses.

This doesn’t mean you have to work 24/7. There are some great franchise opportunities for people looking for part time work. But even if you’re working part time, you’ll need to be grinding whenever you are at work. If you’re not working as hard as you can, you’re leaving money on the table.

These 10 qualities give a good picture of things prospective franchisees should consider before making a buying decision. Do you think you have the DNA of a franchisee within you?

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