Posted on July 30, 2013

How to Deal with Common Challenges of Running a Franchise

Generating one out of every seven jobs in the US and contributing $1.5 trillion dollars to the economy each year, the franchising sector is obviously doing something right. Franchising seems to provide the best of both worlds: established business methods and professional advice from experienced leaders, combined with the exciting prospect of running your own business.

*However, managing a franchise comes with its own set of unique challenges and hurdles*—whether you are a franchisor trying to build your brand, or a local franchisee dealing with the day-to-day realities of running your business. Here are several tips to help both franchisors and franchisees meet these challenges head-on.

4 Tips for Franchisors

# Embrace your supporting role
To be successful, you must embrace your role as a franchisor. No longer are you putting out the everyday fires of running a business. Rather, you must act as a helpful and supportive parent to the franchisees—setting rules, upholding standards, teaching, advising and monitoring their success.

#2 Choose capable franchisees
Franchisors must grant franchises to deserving owners. They cannot be sold to the highest bidder, but rather must be granted to a capable franchisee. Remember: a typical franchise contract lasts ten years. That means that the franchisor/franchisee agreement should not be taken lightly. When you agree to a contract, you commit to helping and developing that franchisee for the agreed-upon amount of time. Choose capable franchisees, and a ten-year contract will be a blessing rather than a curse.

#3 Provide training and support
Franchisees must be trained and supported. Leaving a franchisee to fend for him or herself is not likely to end well for the franchisor. It is important to learn that each franchisee has a different communication style and needs to be addressed as an individual, not talked down to as a “number” or “location.” Focus on the partnership with your franchisees, communicate frequently and give them the systems and technology they need to be successful.

#4 Get comfortable with less control
While supporting franchisees is important, you must also be comfortable giving up a certain amount of control once your franchises get on their feet. No franchisor can attend to every detail of every location, and thus must be comfortable letting franchisees handle daily operations. A franchisor “helicopter parent” will do more harm than good.

4 Tips for Franchisees

# Be a good partner
Maintaining a good franchisee/franchisor relationship is critically important to franchise success. People who have difficulty following directions, dislike working with others and lack determination to make the partnership work will not foster a successful franchise location. It’s also important to remember that the franchisee is tied to the franchisor for a considerable amount of time, and the agreement is legally binding.

#2 Expect to work hard
Buying a franchise is not a guarantee of instant success: it is a venture that takes work. Without effort and initiative, there will be no considerable accomplishments. If you are considering buying a franchise, ask yourself whether you are willing to commit the time and effort to make the business successful.

#3 Develop new skills
When buying a franchise, there is often a considerable learning curve. There are many new skills you must develop to be successful: managing, selling, recruiting, pricing, cash flow—all of these areas may be hard to juggle if you only have experience in one or two. For example, the marketing activities required to attract new customers can be a major challenge if you do not have a marketing or sales background.

#4 Follow the rules
When you buy a franchise, you are no longer working alone. Your franchisor is always along for the ride. There are brand standards to uphold, not to mention complex government regulations to follow. Even if you believe you have a better way to do things, you may hamper your success if you stray from the brand agreement. Know your tolerance for following these types of rules and make sure the franchise agreement fits your comfort level before you commit.

Solutions for Franchise Success

Partnering with Paycor can help both franchisors and franchisees overcome the many challenges that come with running their businesses:

* Paycor’s HR, payroll and timekeeping technology helps franchisees handle employee processes and everyday challenges, while giving franchisors peace of mind that tax filing and compliance issues are being handled.
* Custom Web Reporting gives franchisors visibility into key metrics so they can monitor the success of their franchise.
* Dedicated Franchise Care specialists and Franchise Relationship Managers provide personalized service, tailored to the needs of franchises.

Learn more about how Paycor’s franchise solutions can provide the technology, support and service franchises need to be strategic and successful.

Sources: Franchise.org, AllBusiness.com, Franchise Development System, Expansion Experts