Are today’s disenfranchised workers a good fit for your franchise?
Here are three points for franchisors to consider.
By Mark Cottle
More-frequent layoffs and poor wage growth have left many American workers feeling less-than-enthusiastic about their jobs. Gone are the days of positions being protected by longevity, and mergers are regularly causing job loss. What’s more, inflation has risen at nearly the same pace as wages, leaving individuals with stagnating buying power over the past four decades.
Many disenfranchised workers have found a renewed sense of freedom in franchise ownership. The lure of being one’s own boss is hard to pass up, and thanks to the amplitude of data in today’s information age, potential franchisees can go into the endeavor equipped with more knowledge and power than ever before. If they do their homework, they have a robust understanding of the franchise’s potential performance, the investment needed and other critical factors of dipping their toes into the waters of franchise ownership.
Throughout my career in franchising, I’ve had the privilege of getting to know a lot of individuals who entered the franchise world to make better lives for themselves. I’ve worked alongside experienced business leaders seeking a new path, as well as less-seasoned folks, just as dedicated and enthusiastic, on a mission to make a name for themselves.
One former colleague in particular comes to mind. A retail manager, his lack of potential for growth in that space led him to buy a home service franchise. The first few years were rough, but he was experienced in business and had a long track record of success working within the confines of an established business model. He pressed ahead and became deeply familiar with the metrics on which to focus to increase profitability. Now he measures success in the number of weeks he gets to travel and spend time with his family. These are perks his previous job would have never afforded.
While becoming a franchisee – and the long list of benefits that comes with it – is attractive to many aspiring entrepreneurs, franchisors know all too well that not every aspiring franchisee is a good fit. Owning a business requires discipline, planning and understanding, not to mention the fact that individual industries have unique circumstances and possible pitfalls.
Franchisors should take these three crucial steps to ensure their potential business owners are well-suited and prepared for the venture.
1. Care About the Outcome
By sharing tools and best practices, franchisors set new business owners on the path to success. Most reputable businesses already do this to some extent, but the availability and quality of franchisee support varies widely.
Efforts to acquire new franchisees absolutely must be paired with a desire and willingness to work to help owners win in their efforts. What’s good for the goose is good for the gander, as the saying goes.
The lifecycle of any new business will include some ups and downs. New franchisees who aren’t supported during these waves might not see better times ahead, and the company will lose potential business. Assist and support your franchisees when they experience a drop-off in sales – help them see the light at the end of the tunnel. Being able to consult with dozens or hundreds of people who have already been down your path is one of the biggest benefits of a franchise system.
2. Be Realistic
Franchisors might be tempted to make their business sound better, easier or more profitable than it really is in an effort to lure potential owners. But that will nearly always backfire. Setting genuine expectations about workload, costs and other aspects of the business will ensure that new owners are onboarded with a clear understanding of what to expect and what they’ll need to do to thrive.
Don’t risk disenfranchising team members who are just getting on their feet. Starting a new business is hard enough without finding unexpected stumbling blocks along the way.
3. Know Your Brand
Not everyone who can come up with the capital to buy in is going to be pitch-perfect for a particular brand. Especially with more complex lines of work, consider carefully how you evaluate potential franchisees.
What’s more, while every franchise system will have a set of rules and operating standards, some are quite restrictive while others leave room for flexibility. Those with a strong entrepreneurial spirit could feel too constrained in a tightly run company, while others who are used to working within detailed guidelines will flourish.
Poised to Win
We seek out franchisees who are both humble and hungry. These attributes are part of our DNA. People who recognize they’re not always the smartest person in the room but aren’t afraid to roll up their sleeves and get things done: Those are the individuals who are poised to win in our business.
As the economy remains strong, more people will be willing to invest in and venture into the franchising world. And while it might seem relatively simple to buy into an established brand, that doesn’t make franchising a perfect solution for disenfranchised workers looking to strike out on their own. Only strong evaluation and planning at the outset will help to ensure your franchise system finds and retains the best franchisees.
Mark Cottle is executive vice president of franchising for Lendio.