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By focusing on four key elements, franchisors can have peace of mind that they’ve taken the right steps to build a system with franchisees equipped to be successful partners.
By Jason Ryan
When people consider investing in a franchise concept, the first question they often ask is, “When will I open?” After having just made such a significant financial investment, entrepreneurs are eager to turn a profit as soon as possible. Of course, there are numerous real estate, logistical and franchisee variables that must be accounted for in order to open a unit promptly. When franchisors provide an organized and streamlined start-up strategy, their franchisees are more likely to open quickly and turn a profit faster. With more than 43 years of experience, Maaco has put forth considerable effort in perfecting the start-up process.
When it comes to the new opening process, franchisors should consider four key elements that contribute to success:
- The importance of following the system,
- growing with the right franchisees,
- establishing a successful opening process, and
- assisting franchisees with support teams.
Having a detailed game plan in each of these four areas benefits franchisees individually, as well as fuels more efficient expansion for the franchise system overall.
Following the system
New franchisees come from a variety of backgrounds, therefore they may have their own ideas about the best way to run their operations. As a franchisor, it is important to listen to those thoughts while emphasizing the benefit of following the proven franchise system with which they’ve aligned themselves. Reminding them of why they joined a franchise brand, instead of going into business as an independent owner, helps to encourage them to be more open-minded towards verified processes and revenue streams.
To help franchisees better understand and adhere to your business model, it helps to break it down into your main revenue streams. At Maaco we refer to this as our “three-legged stool” made up of:
- Retail: Customers who walk in to request services,
- Fleet: Additional work that’s available to locations through established partnerships, and
- Direct Repair Programs: Business provided through insurance.
Helping franchisees understand the key revenue sources of your business model will give them more opportunities to succeed, break even and become profitable.
Franchisee selection
To ensure a smooth start-up process, it’s essential to find the right entrepreneurs to grow your brand. Identifying the right franchisee should begin with an in-depth conversation to help evaluate the potential success of a candidate. This is the time when franchisees can learn more about the brand, voice any concerns and ask critical questions.
Forming and growing a network of sophisticated investors that can help validate potential franchisees, develop markets and establish territories is a goal you should set within your organization. Maaco hosts an annual convention where we give awards to top performing franchisees who we look to help identify growth, as well as capabilities within a specific market. Annual franchisee conventions provide ample opportunity to identify partners that align with desired market growth.
Successful opening process
A franchisor needs to be reassured that a new owner will be able to uphold his responsibilities prior to opening, which is why the approval process requires background and credit checks. Valid candidates must be evaluated by nearly all departments including real estate, finance, legal, development and operations, in order to ensure their suitability. Regardless of how large or small a franchise is, when all evaluations have been completed, it’s a good idea to get the brand president’s final approval.
When it comes to evaluating a potential market and selecting real estate, there’s no time to waste. Corporate should start the search before a franchisee signs a license — evaluate the population count, regression forecasts and local demand for services in the area. This is one of the most effective ways to quicken a franchisee’s start-up process as well as put their mind at ease regarding the potential for success in their market.
Similar to choosing the right franchisee, it’s essential to be selective when purchasing real estate. The goal is always to reduce the time gap from license sale to grand opening, so it’s wise to invest in a dedicated real estate team to look for available property or existing businesses to convert.
The start-up process is a full-time commitment, so it can be challenging to keep long-term growth in mind. However, providing the tools and resources for sustainability are necessary to implement right off the bat. Determining these elements, like advertising contributions to help with the launch of a location, can help to promote and establish a franchisee in their market.
Support teams
Typically, there is one common reason entrepreneurs choose to invest in a franchise rather than go at it alone — corporate support. Maaco knows its franchisees count on us to make sure they feel the backing of a national brand before and after launch. A dedicated real estate department can assist with financing, project management and the creation of development plans. Pairing franchisees with a project manager to assist in location logistics is extremely beneficial. This support includes designing the layout of the store, working with a general contractor and coordinating equipment purchasing and installation.
Project managers can also be of assistance in setting up training for franchisees. Entrepreneurs are relying on the franchisor to show them how to successfully launch their business with efficient operations. This is not possible without an in-depth training program so that new franchisees can better follow a franchise system before, during and after the launch. In addition to three one-on-one weeks of training at the Maaco facility in Charlotte, an operations team member also visits the new location for a “shake week,” where a dedicated field trainer goes to the shop to assist with the successful launch of a store.
Once the doors are open for business, support from the operations team is vital. To start, having a field trainer for three weeks during the opening of a store helps to smooth out any bumps that come with a new location. Additionally, it’s key to have a specified operations director help a franchisee analyze the success of a location through quarterly meetings and profit and loss reviews. This committed support is necessary as owners will likely find obstacles in their first few months of opening their business. During the growing pains of starting a new franchise location, there comes a great opportunity to evaluate how owners are utilizing the business model.
Finally, new franchisees can benefit from corporately established marketing support in the form of local marketing managers who help attract new business. These professionals can assist in streamlining everything from grand opening support to bringing overall awareness through specific marketing initiatives.
Starting franchisees off on the right foot requires substantial investments of time, people, resources and money. By focusing on the four key elements outlined, franchisors can have peace of mind that they’ve taken the right steps to build a franchise system with franchisees equipped to be successful partners for years to come.
Jason Ryan is President of Maaco, which has nearly 500 units operating across the United States and Canada.