Running a franchise business can be hard work and regularly requires patience and planning. However, running a franchise does have some benefits, such as an existing customer base and brand awareness. Although, it is essential to understand that these benefits do not guarantee a successful franchise. Often, franchisees can receive help from their franchisors to ensure they are running their franchise branch successfully. Of course, there are other excellent methods you can use to ensure the success of your franchise business. This article will outline six tips for franchisees that will help you run a successful New Zealand franchise.
This publication provides you with the fundamentals for franchising your New Zealand business, including set up, branding and management.
1. Location Matters
Many franchises rely on their locations to drive their sales and profitability. For instance, you may own a well-known franchise, but if your location proves unsuitable or your customers cannot locate you, your efforts may go to waste. As a result, you must carefully analyse all the possible location options and the competition in the area. Moreover, you need to understand whether the location has a solid customer base or a market that has the potential to grow.
When choosing a location, you may need to consider where you want to set up the operation. As a result, you need to consider certain facilities and whether you need to lease a property. Sometimes a franchisor may help you with the property lease or set criteria for premises. Essentially, the commercial property lease will entail you and your landlord’s rights and obligations concerning the property.
2. Develop a Business Plan
Although a franchisor will have some degree of control over your franchise, you still need to develop a business plan. A business plan acts as a roadmap, setting out your goals and where the franchise should be heading. Furthermore, a business plan helps attract investors and gives them a guarantee that you will utilise their funds well.
Therefore, your business plan might include:
- an executive summary;
- a franchise description;
- a product and service line;
- long and short-term goals;
- the target market;
- market analysis and strategy;
- competitors; and
- financial information.
3. Having Enough Capital
The most common reason why franchises close is a lack of capital. Without sufficient funds, you will struggle to run the business and may have to rely on being in debt which also comes with its risks. Before buying a franchise, you need to understand how much money you:
- have;
- need to invest; and
- are willing to risk.
Further, when making these considerations, you must include the initial franchise fee and any other costs your franchisor wants you to cover.
If you realise while running the franchise that you have run out of funds, then there are some ways to solve this. Firstly, you can consult your franchisor to understand if they can help you out or whether they have restrictions on where you can acquire funding. You can raise capital through:
- crowdfunding;
- friends and family;
- angel investors;
- venture capitalists; or
- banks.
4. Follow the Franchise System
In most cases, a franchisor’s system exists because it has proven to work in the past with various markets and customers. Therefore, you must not modify the system. If you do, you risk your franchise’s success and the franchise brand’s complete success. Further, it would help if you did not jeopardise the existing brand as it is often the key benefit of a franchise. Additionally, you must not make specific changes without the consent of the franchisor, including:
- adding or changing products;
- advertising campaigns; and
- the quality of goods.
Moreover, by changing the franchise system, you may be breaching your franchise agreement resulting in a termination of your franchise.
If you are unsure of your franchise’s system, it is always good to ask questions and clarify things. Your franchisor will appreciate your efforts to stay consistent across the brand.
5. Hire the Best Talent
Employees are often the key to your franchise’s success. Without people with the right skills, running your franchise and getting tasks done will be complex. To find the best talent, you must actively recruit and ensure your franchise appeals to potential employees. This includes writing an attractive job description and highlighting employee benefits. In addition, franchisors may be willing to offer training to their employees to ensure everyone knows the system and how the brand operates.
When hiring employees, you need to prepare an employment agreement for each person you hire. You can do this with the help of a lawyer. Furthermore, you must write (or oversee that making of) the employment contract as you can face a penalty if you fail to do this. Some terms you should include in your employee agreement include:
- name of employer and employee;
- job description;
- number of hours;
- wage rate or salary;
- dispute resolutions;
- leave entitlements; and
- redundancy.
6. Take Advantage of Your Franchisor’s Support
Many franchisors offer various resources to help you replicate their success. As a result, you need to use these resources as much as possible to ensure your franchise is heading in the right direction. Moreover, you can develop your skills and become a better franchise owner and leader. Your franchisor may help you with:
- financing;
- training;
- sales;
- marketing;
- technology; and
- web-support.
Your franchisor may also have a database or software filled with training videos, manuals, webinars, and other tools. Such tools may revolve around marketing, management, and much more. Not only can these resources help you, but they may also benefit your staff.
Key Takeaways
To run a successful New Zealand franchise, there are six factors you need to keep in mind. Firstly, you must choose a suitable location and process to develop a business plan. After that, you must ensure that you have sufficient capital and follow the franchisor’s system. Moreover, you must recruit the best employees and take advantage of your franchisor’s available resources.
If you need help running your franchise, you can contact our experienced franchising lawyers to assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at 0800 005 570 or visit our membership page.
Frequently Asked Questions
You can raise capital through your franchisor’s financing programs, crowdfunding, friends and family, angel investors, and venture capitalists.
Your business plan’s key terms include long and short-term goals, target market, market analysis, products and services, financial goals, and a franchise description.
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