Opening a franchise can feel like a huge gamble. But what if it didn’t have to?
Entrepreneurs who open franchises often focus on whether the business will succeed, especially in the long term. However, those who know what to look for can recognize the signs of success and rest assured that their business is on the right track.
Looking for such reassurances about your franchise? Or maybe you just want to know how you can take your business to the next level? Keep reading to discover the biggest signs that your franchise will be a success!
1. Transparent Communication with the Franchisor
By definition, franchising involves a symbiotic relationship between the franchisor and the franchisee. Because of this, one of the biggest successful franchise indicators is that you receive clear and transparent communication with your franchisor.
For example, if they quickly respond to emails and phone calls, then you know you can rely on them for support. If they’re honest about mistakes and setbacks they have recently experienced, this shows they value transparency over pretending that everything is fine. In the long run, that’s exactly what you want from a business partner.
2. Increased Sales
Some signs of positive franchise performance are more obvious than others. For example, if more customers buy your products and services each month, that means your business is growing. Once this happens, it’s important to keep finding innovative ways to keep product sales up.
Between modern technology and your franchisor’s support, monitoring analytics related to your sales is easy. Over time, this will tell you which products are selling more and what your customer demographics are really like. You can then better customize your products and services to the unique needs of your customers, leading to more positive business growth from year to year.
3. Increased Brand Awareness
One of the reasons running franchises can be a gamble is that even when the franchisor has a proven product, that product hasn’t been tested in every market. In fact, it’s not uncommon for franchising opportunities to be located in areas where the franchisor doesn’t yet have a strong foothold. That means it’s up to you to help put your business on the map for local customers.
Due to this, it’s important to monitor brand awareness in the area. If you discover that more people are familiar with your store and are talking about it with their friends, family, and coworkers, that means you’re doing a great job of building the brand and maintaining brand consistency. And if you want a more concrete way to measure increased awareness, provide incentives for customers to recommend your business. If the number of referral customers grows each month, then you’re likely on a solid business trajectory.
4. A Glowing (and Growing) Reputation
It can sometimes be anxiety-inducing, but it’s vitally important that you keep track of your business reputation online. To do so, you can check out their Google Reviews as well as reviews on services such as Yelp. You should also check social media to discover what people say about your franchise.
If you have a solid online reputation, that’s good news — it means your business has been impressing people. Moreover, those impressed people will likely recommend your branch to others. If you’d like to improve your online customer satisfaction rates, consider offering small discounts or other incentives to customers who can prove they left a positive review of your company online.
5. Consistently Meeting (or Beating) Your Growth Metrics
Those with some entrepreneurial experience are usually grateful that many of the best practices of running a traditional business typically apply to franchises as well. For example, if you want to unlock your full franchise growth potential, you need to pay close attention to certain key performance indicators.
For example, it’s important to keep track of how many regular customers you have successfully maintained and how many have left. Similarly, you need to keep track of how much revenue is coming from your newest customers and how much is coming from your regulars. As long as you can maintain a solid retention rate while finding innovative ways to recruit new customers, you can rest assured your franchise is in a good place.
6. Potential for Future Growth
Another key performance indicator you should carefully monitor is your gross margin. When the smoke clears, this margin represents how much money you’re bringing in after considering the cost of goods. While it’s easier said than done, your ideal outcome is to improve upon your gross margin each year.
You can expect to increase your income consistently if you see steady improvement. With such profitability projections in hand, you can rest assured that your current franchise is successful, and you may want to consider opening a second franchise in the near future.
7. As Much (or As Little) Support as You Need from the Franchisor
Earlier, we touched on the fact that honest and transparent communication is a cornerstone of a strong franchise support system. We need to add another lesser-known sign that your new franchise will be a success: you get as much or as little support as you actually need from the franchisor.
In short, it’s important to avoid the extremes. While nobody wants a franchisor that is distant and hard to get hold of, it’s similarly true that nobody wants one that wants to micromanage everything and generally smothers franchisees. If you have a business partnership with someone who provides help when you need it but otherwise trusts you to handle things on your own, then your franchise will likely be a major success.
Start a Successful Franchise Today!
Now you know the successful franchise indicators that you can rely on. But do you know where you can find a reliable partner who can help you take your business to the next level and beyond?
Here at Confie, we are always looking for talented entrepreneurs who are ready to achieve their full potential. To discover how we can help you go into business for yourself, feel free to reach out online or just give us a call at 714-252-2500!