signs successful franchise

5 signs of a successful franchise

Sarah Stowe

What makes a franchise successful? For starters, like any business, it needs to show a profit. It needs of course to trade ethically, and to deliver a reliable service or product that customers need.

A franchise however, unlike an independent business, also needs to show it has a good relationship with its franchisees.

Our top tip is to check out what franchisees think of the franchisor. Does it provide the service it promises? Are franchisees happy with the levels of communication? How flexible and supportive is the business? What happens in the case of a dispute?

It is also worth checking the brand’s reputation online – what are customers and former staff saying about the business?

In addition, here are five ways to spot a franchisor that has a strong and resilient partnership model.

5 signs of a successful franchise

1. Values alignment

The ethics and values of a business extend beyond a mission statement on the wall behind the reception desk. A successful franchise will demonstrate its values in the way its head office and regional support teams behave – both internally and with external suppliers and clients. If franchisees have clearly instilled the ethos in their own businesses, and their staff, that’s a great sign.

The alignment continues with a focus on shared achievements. Of course a franchisee and franchisor should share goals – mutual interest is the key to everyone’s success.

Trust is fundamental

A sense of shared commitment and willing collaboration between all parties, franchisee and franchisor, franchisor and supplier, franchisee and business client, is the key to continued trust.

A successful franchise will be able to exhibit strong ties and commitment across the board. A high renewal rate among franchisees is a good sign.

2. Transparency and accountability

Personal responsibility is important in any business. In a franchise the clarity around roles and responsibilities is particularly relevant. A franchise should have clear, well written agreements, and processes.

Transparency is a highly valued trait. There are two independent ways to discover a brand’s commitment to disclosure.

Independent sources

The Franchise Rating Scale operated by FRANdata awards brands for their high levels of transparency, among other things. Visit the Australian Franchise Registry to check on the status of a particular brand.

A new government website, the Franchise Disclosure Register, lists all franchises operating in Australia. Some franchises have shared the minimum amount of data required, other brands provide comprehensive information.

3. Professionalism

Anyone in a business can act with professionalism at any time – it doesn’t matter the type of business or the work role. A person answering a phone call politely and professionally gives the right impression. A query dealt with in a timely fashion is a positive sign.

Professionalism extends to the buying process. It is vital that a franchise buyer has the opportunity to review all the relevant documentation, to ask any questions, to research the brand and franchisees.

There is no need for potential franchisees to feel pressured to sign an agreement.

4. Culture under pressure

But what happens when things go awry? How does the company’s culture translate in times of disharmony?

And how does it maintain its standards when franchisees fail to comply?

Compliance is key

With compliance at the heart of a franchise, every business owner’s reputation is affected when standards drop. So how does the franchisor approach this, and how effective is the process?

A franchise must have a dispute resolution process, with the goal of avoiding litigation. However it is important to find out how the franchisor deals with disgruntled – or wayward – franchisees at an early stage.

5. Good communications are a sign of a successful franchise

Miscommunication and misunderstanding between franchisor and franchsiee can unfortunately lead to dissatisfaction. Communications must be clear, transparent, relevant and regular.

It is a good sign if a franchisor has multiple channels of communication to ensure everyone can access information in a way that best suits them.

A franchise advisory council, local representative groups and channels for feedback are clear signs the franchisor is attuned to the need for good communication.