People often ask me why I chose franchising over traditional entrepreneurship. My top reason: franchising comes with business support. Traditional entrepreneurs start out completely alone, or maybe with a co-founder. They typically have to spend years burning through their savings as they figure out product-market fit, pricing, and the most efficient way to operate their new business. Franchisors, on the other hand, provide franchisees with a complete business system that has already been tested and optimized. The franchisee just has to implement it. Good franchisors also provide other types of business support to help ensure the franchisee’s success.
The exact types of support vary by franchisor, however, and some franchisors provide more support than others. As you’re evaluating franchisors, you should consider the range of business support they provide and how that matches up with your own level of expertise. Franchisors that provide basic support may be a good match for you if you have significant operational leadership experience, such as in business, the nonprofit world, or the military. If you are coming into a business or leadership role for the first time, however, you might benefit from working with a franchisor that provides more comprehensive support.
Basic Business Support
Every franchisor should provide a basic level of business support. If a franchisor you’re considering doesn’t offer the following help, that’s a big red flag. It means their business system may not be fully developed, or they may not have the financial resources to fund a support system for franchisees.
Operational Manual
The operational manual typically includes any network-wide policies (e.g., related to paying your ongoing franchise fees or hiring employees), plus requirements and recommendations for how to implement the franchisor’s business system. Having this information in writing helps protect both the franchisor and the franchisee, as it makes both sides’ obligations clear and enforceable.
Training
Franchisors typically require some kind of training to familiarize you with their business model, key policies, and culture. This training may take place in person (e.g., at franchise headquarters or a regional office) or online. Some companies require their franchisees to complete key trainings on an ongoing basis, such as every year. The best franchisors also offer voluntary trainings that help you develop and succeed as a business owner.
Marketing
Every good franchisor should provide marketing assistance, but the level of support varies widely. National brands typically run national ad campaigns, funded at least in part by franchisees’ marketing fees, and provide opt-in opportunities for various localized promotions. Smaller regional brands are more likely to provide support in the form of billboard placements, targeted digital ads, or mailers. Your franchisor should also maintain a website and perhaps a social media presence that (1) helps advance the overall franchise brand and (2) gives potential customers an opportunity to locate and connect with your business.
Networking
The franchise owner network is a key part of the business support you get as a franchisee. Your fellow owners can serve as mentors, help you troubleshoot problems, and provide moral support when you need encouragement. Avoid franchisors who discourage contact between owners. This may be a sign that the brand is trying to hide a high rate of dissatisfaction among franchisees. Also watch out for brands whose franchisees seem isolated or unwelcoming, which can be a sign of an overly competitive or cutthroat culture.
A good franchisor will also connect you with a network of vendors who do quality work and possibly provide discounts or priority service to franchisees. It’s not uncommon for franchisors, especially those in the fast-food sector, to require their franchisees to use certain vendors. This kind of requirement by itself shouldn’t scare you away from a franchisor. But be alert for situations where required vendors take advantage of their captive audience by doing shoddy work or charging exorbitant prices.
Comprehensive Business Support
Some franchisors go above and beyond industry norms to provide truly comprehensive business support. Typically, this kind of support involves one or more of the following options.
Financing
Some franchisors offer financing directly to qualified franchisees or maintain a network of financial partners who will quickly approve startup loans. These funding sources can be convenient, but read the fine print carefully. Loans may carry a higher interest rate or shorter payback period than other financing options.
Software
In today’s world, you usually need software to run a business. Many franchisors have proprietary software packages that are either optional or required for franchise operations. These typically include software for point-of-sale, setting customer appointments, scheduling employees’ work shifts, procurement, and marketing or CRM. If your franchisor does provide proprietary software, they should also provide technical support to go with it.
Onsite Support
If you purchase a brick-and-mortar franchise, your franchisor may offer onsite support, especially during the launch phase. Onsite support typically includes one or more site visits with a representative from the corporate office. This person may help you optimize the setup of your space, train your employees, learn how to use proprietary software and equipment, and more.
Inside Sales/Customer Service
Some franchisors provide business support in the form of a centralized inside sales and/or customer service team. These two functions may be combined or separate, depending on the franchisor’s size and the nature of the business. Between them, inside sales and customer service teams can make phone calls, send out sales materials, field customer questions or complaints, and book customer appointments. This kind of support can be especially valuable if you are new to running a business, don’t have expertise in sales, or are working solo or with a very small team.
Franchise Fees and Business Support
One final note: there’s typically a direct relationship between the fees a franchisor charges and the level of business support they provide. More support means higher fees. Less support means lower fees. Or at least, that’s how the equation should work. As you evaluate franchisors, compare like with like, and remember to take both up-front and ongoing fees into account. Franchisors who charge similar fees should offer similar levels of support, and those who charge higher fees should offer more comprehensive support.
If you see any deviation from this pattern, examine the deal more closely. If a franchisor charges low fees but offers comprehensive support, they may just be a newer brand trying to attract more owners – but they may also be operating under an unsustainable business model. Conversely, if a franchisor charges high fees but offers minimal support, they may be in dire financial straits and trying to make up the shortfall by raiding franchisees’ pockets. Don’t be afraid to ask questions, and walk away from any franchisor that doesn’t provide satisfactory answers or whose business seems to be on shaky ground.
Need help evaluating what level of business support you want or need from a franchisor? My co-consultant Lauri and I can help! We’re experienced franchise owners who’ve been through the process ourselves, and we prioritize self-assessment to make sure you find the right franchise fit. Best of all, our services are free! Book a call with one of us today to get started on your journey.
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