management | 1 min read

5 Components of Successful Franchise Management

5 components of successful franchise management
Chloe Henderson

By Chloe Henderson

A company's growth relies heavily on the stakeholders' ability to market and increase brand exposure. However, expansion often requires hefty investments that many small businesses simply cannot afford.

Franchising is a great alternative for making large capital investments, enabling businesses to expand their market presence through agreements. The strategy is relatively straightforward-

1. The business owner becomes the franchisor.

2. The franchisor gives a third-party, the franchisee, permission to use the brand's name, internal systems, product lines, or other desired tools.

3. The franchisee pays the initial cost, plus ongoing royalties, to the franchisor in order to use the acquired trademarked item.

The franchising strategy is an excellent way to generate additional revenue streams and promote profits. Income from this revenue source often varies, as royalties depend on a set percentage of sales.

Franchise management is also a great marketing tool that can scale with the business. The more franchisees the company partners with, the more consumers are exposed to their brand.

Components of Successful Franchise Management

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Managing a franchise network requires diligence, care, and extensive planning. The most successful franchise systems implement the following elements-

1. Technology

In order to survive in modern markets, franchises need to capitalize on the newest technology, such as software tools and systems. Advanced solutions are relatively inexpensive and handle paperwork, data storage, and communication between the owner and franchisees.

2. Professionalism


Regardless if the company is large or small, owners need to have a sense of professionalism. Otherwise, they may find it difficult to build partnerships and find investors.

Owners should be poised, polished, and open-minded when dealing with franchisees, as it can be off-putting when the franchisor is proud and stubborn.

Investors are also always on the look for signs of danger when it comes to company health. Therefore, representatives should be ready to put their best foot forward when meeting with prospective clients.

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3. Creativity

Franchisees are always re-evaluating their investments to determine if it is worth the money. Franchisors need to keep their investors by using new and creative ways to market their name or product.

The most successful franchise models are multi-faceted and don't rely on one benefit to attract clients. They are continuously updating their marketing approaches and business model to fit the fluctuating demand.

The business should have an innovative management team that is always exchanging new ideas on how to improve the bottom line.

4. Partnerships

A franchise's success relies on its partnerships. And investors do not just produce another line of revenue, they enter a partnership to form a symbiotic agreement.

Therefore, franchisors should discuss the needs of each franchisee and discover how to provide the needed resources. In fact, many owners find an additional partner that can barter the desired resources rather than making a capital investment. This reciprocation keeps all parties satisfied and builds a long-lasting partnership.

For example, if the owner finds that their franchise system uses large volumes of printed materials for marketing, they can become partners with a printing company. This networking creates a stable, self-sustaining system that benefits everyone involved.

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5. Communication

Many big corporations tend to lose sight of the little things that make a difference, especially keeping communication with partners. Even when a business lands several franchisees, owners must give each investor special attention.

Keeping communication does not just entail giving updates and answering questions. Management should keep franchisees in mind whenever they are making impactful decisions. Managers should run different scenarios to discover what implications each option holds.

Before any large decision is made, each affected party should be consulted to ensure they approve of the plan of action.

Tips to Improve Franchise Management

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Franchisors are continuously re-evaluating their networking efforts and processes to improve their management skills. Four best practices used to enhance franchise management include-

  • Making Long-Term Goals

In order to successfully grow a franchise, it needs to be built for expansion. By setting long-term goals, owners can coordinate resources, systems, and funds to support multi-unit operations. Otherwise, the business is unequipped to grow even when an opportunity occurs.

  • Continuously Adapting Processes

A company's needs evolve with time and new challenges, which requires routine assessments of internal operations.

Franchises still utilizing legacy processes may be unknowingly inhibiting their profitability and expansion. Therefore, management should consider updating procedures with new technology to streamline operations and promote growth.

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Try it free for 14 days.

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  • Establishing Open Communication
A lack of communication can lead to counteractive operations, a poor reputation, and unsatisfied franchisees. Employees, partners, and stakeholders should all feel that they are heard and valued.

By establishing an open line of communication, owners can send updates, answer clients' questions, and address concerns before unnecessary worry or anxiety formulates. It also ensures everyone is on the same page and working towards the same goals.

  • Increasing Brand Exposure

The more franchisors can help their clients, the more exposure their brands get. Businesses often overlook the fact that franchisees have the power to weaken their brand's identity with low-quality promotions and marketing.


Therefore, owners should ask investors if they can provide any resources or tools to enhance their marketing campaigns or customer reach.

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