According to the IFA (International Franchise Association), the growth of franchise businesses has continued to outstrip non-franchise business growth in 2016. This continues a robust pattern set over the past six years, making franchisees a great bet for investment. Here are a few common mistakes that franchisees can be encouraged to avoid – and some tips for investors engaging with franchisees to promote greater success and bigger returns:
Common Mistakes
- Cutting costs and/or services out of the business model in an attempt to increase profits. Of course, franchisees need to look at every line item expense, but compromising the customer experience is a big risk.
- Most investors want to see real returns as an owner acquires additional franchises. Even if a great opportunity pops up, it’s better to solidify an existing business before expanding the empire. Franchisees need to resist the urge to run before they can walk.
- Not understanding the market. According to Inc.com the single largest mistake new franchisees make is not understanding their market and not taking the time to do proper research.
Ways to Assist Franchisees
Education
Investing in training franchisees provides a future pay off for Franchisors. When a franchisor takes a franchisees under their wing to coach, the benefits to both are exponential. Franchisees learn every aspect of the business on a deeper level. Even though franchisees are in business because independence is an important value for them, develop a diplomatic yet systematic coaching or training program as a win-win for each. The point being that two heads can often be better than one and that information-sharing is in everyone’s best interest.
Data Monitoring
Analytics are an important aspect of any business model and franchising is no different. Both Franchisors and Franchisees need to familiarize themselves with regional customer demographics, sales revenues, and changes in local markets – all of these things need constant monitoring. Monitoring tools such as territory mapping software are now widely available to assist with data crunching and strategic planning. Staying up-to-date with trends and changes in a fast-paced business world is no longer just an option – it’s essential for staying competitive.
Franchisors can encourage franchisees to keep up-to-date in the spirit of shared discovery. Offered with care, this kind of information and support is invaluable to franchisees seeking to grow their business and could lead to solutions that will boost everyone’s bottom line.
If you are a Franchisor looking for ways to help new Franchisees understand their territory, contact GeoMetrx at 888-848-4436.