The 5 Franchise Successful Principles

To be a successful franchisee there are 5 universal principles you must nail.

Whether you're in car repair, painting, power washing, health, or pet care doesn't matter. These principles apply in every franchise business.

Today we'll provide a high-level overview of five principles. We'll do a deep dive into each principal in the near future.

#1 People

People are the lifeblood of every franchise business.

Every franchise is a people business that just happens to fix cars, fry chicken, clean homes, etc.

The better you are at identifying, hiring & retaining talent, the more success you will have. This is why franchisors look for candidates with leadership experience. They can teach you all the industry-specific knowledge but it's a lot harder to teach someone how to be a good leader.

About 8 weeks ago we acquired two existing franchise locations. Both with tenured teams, doing about the same sales, located 15 minutes apart. We followed the same process as we do with every acquisition. The results of the two shops couldn't be more different

• Shop A: sales are up +50% with the exact same team

• Shop B: sales are down 50% since the entire team quit

The Shop A team embraced the changes, is excited about the future, and excelling. The Shop B team viewed all the same changes as detrimental to their future and jumped ship.

#2 Process

Following a proven process creates a compounding flywheel on your business.

A) Process creates demand. You know that chicken sandwiches will taste the same in Texas & Florida.

B) Execution must be consistent. Your job as a franchisee is to hold your team accountable to follow each playbook: marketing, sales, operations, & admin.

C) Franchises have a lot of turnover. Become a hiring & training machine. New trainees will learn quickly & rise (or fall) equal to their environment.

4) A franchise provides a proven playbook to make money. Once you get the right people, following the right process, you can focus on growing units.

#3 Sales

You need to track every step in the sales process and look for opportunities to improve:

Advertise > Leads > Inspection > Sales

Example sales process from my business:

Advertise - large format direct mail within a 1-mile radius of the location. We can adjust the design, the offers, the mailing routes & frequency to improve the response rate.

Leads - every inbound phone call is recorded to track how many calls we convert into appointments. Phone training will improve our ability to convert those leads.

Inspection - once the vehicle is in the shop our team will inspect the vehicle. We address the initial concern, safety issues & maintenance opportunities. A thorough inspection will yield more results vs. one that is rushed.

Sales - presenting the inspection results to the customer. Prioritizing work, offering payment options, educating to build trust, etc.

#4 Margin

You can't significantly influence your fixed costs (rent, utilities, insurance, royalties, etc). They are what they are.

Instead, focus your energy on the two big costs we can control: cost of goods & payroll.

Cost of Goods Sold (COGS) is the direct materials used in producing the sale. In auto repair, it's the new parts we install. In house cleaning, it's the cleaning supplies.

Payroll is the direct labor to produce the sale. In auto repair, it's the in-store team that sells & produces the work. In house cleaning, it's the maids.

Every percentage point you save on COGS or Payroll falls to the bottom line

For example, if you can reduce your COGS & Payroll by $3,000 (3%), you increase you net profit by $3,000 (3%)

#5 Loyalty

The final principle is to prioritize creating customer loyalty. Returning customers cost significantly less to acquire and spend significantly more vs. new ones.

Recurring revenue businesses naturally create loyalty. Fitness, house cleaning, mosquito spraying, etc. make this much easier.

For transactional businesses, look for ways to create loyalty. The simplest way is to deliver excellent customer service. Customers who have a great experience will use your business next time.

You could also proactively set the next appointment, offer a package deal to get incremental work or do outbound calls after 3-6 months to follow up.

The franchisor will provide a playbook but in many franchises, you will have flexibility in finding ways to improve the system. If successful you'll share those ideas with other franchisees who will reciprocate by sharing their best practices with you.

Summary

The five franchise success principles are people, process, sales, margin & loyalty.

I'll do a deeper dive into each one in the upcoming weeks. In the meantime, there are 3 ways I can help you

Franchise Matching - my team helps people find the best franchise based on their budget, goals, skills, & location. 100% free. Book a discovery call here.

Podcast - every week I bring on franchisors, franchisees & provide my insights into creating wealth through owning franchises

Twitter - follow me @brianbeers

Cheers!

Brian