In the U.S., franchise establishments make up 11.4% of all enterprises. These statistics are as shown by the 2017 Economic Census Franchise Statistics Report. Franchisors get into this trade as it offers various benefits. These include the large scale of economies and the low risks it involves. Yet, a successful franchise, like any other venture, requires effort to thrive. Read on to identify four tips for running a successful franchising business.
1. Due Diligence
Disclosure is the next step after sending a request for consideration (RFC). Perform detailed due diligence on the franchise disclosure agreement (FDD). This is crucial to test the validity of a company to avoid making bad investments. A franchise attorney can help review the FDD and point out any grey areas.
Next comes validation. It involves talking to other franchisees in the system. This is further confirmation of the agreement’s legitimacy. However, it is impossible if the brand has only one corporate location. If everything ties up, schedule a discovery day to meet the corporate team that will be supporting you. This is the last due diligence step before the license award.
2. Data Security
Cybersecurity is an organization’s focus on data security. This is because of highly publicized data breaches. Other than the loss of revenue, data breach also leads to loss of income. Damage to business reputation is another risk of data falling into the wrong hands. According to Verizon, 28% of data infractions victims are small enterprises. Common data breaches include email phishing, ransomware, and business email compromises.
An adequate data protection program consists of a balance of privacy and security controls. Familiarize yourself with laws that govern data privacy in a franchise—for instance, the California Consumer Privacy Act (CCPA). It states that consumer privacy rights are included in the company privacy policy. Consider hiring cybersecurity experts to safeguard data.
The law requires that the affected party be notified if data was violated and personal information is acquired. Some states need notification from state regulators. These include attorneys general and state police. Additionally, some federations require consumer credit reporting agencies to be informed.
3. Smart Management Systems
Franchises that use smart management systems are more competitive. These systems allow them to make informed business decisions. Technology and software systems contribute to this. Though application software requires significant investments, it has a high return on investment (ROI). Building companies to the tune of 43% spend one to two percent of their income on software. This is as shown by research conducted by Softwareconnect.com. They help keep track of various tasks such as:
- Organized onboarding
- Field staff scheduling
- Integrated accounting
- Branding and social media management
By integrating data into the franchise account, the software saves time and reduces human error. A scheduling tracking software can help you make an automatic return call for appointments. Also, it helps build customer relationships. This is through providing clients with timely updates. With software, you can spend less time running the business and more time growing it.
4. Business Plan
A business plan can help you stay focused by detailing the goals of your franchise. Writing one can seem like a major undertaking. Yet, there are various helpful resources online. A plan is essential to obtain any funds from investors as they need it to gauge the viability of the business. Your financial projections predict your loan repayment ability. Hire a financial security expert to advise you on these financial aspects. They will ensure adherence to financial security laws.
When writing a business plan, be conservative. Do not inflate business potential, as you may disappoint your partners. You should also include a Non-Disclosure Agreement (NDA) in the plan. This is to protect your proprietary trade secrets. Make it mandatory for anyone reading the plan to sign the NDA.
A business plan will allow you to manage your investment if you are a franchisee. Most franchise investors aim to earn profit. This is by buying low, building up the market share, and selling high. A plan provides an exit strategy for such cases. An exception is if you are planning to make business your lifestyle.
By now, you have gotten the idea of managing your franchise with software. Also, a franchise business plan will help monitor your goals and provide an exit strategy. This is great for growing your business, and for when you plan to sell.