How Do Franchises Make Money

How Do Franchises Make Money With Their Proven Business Model?

In the right hands, a franchise is an excellent instrument for development. A flourishing franchise is secure and profitable.

If your company is profitable and well-established, you may franchise it and expand it over the entire nation.

What is the proven business model for successful franchises?

Firstly, pick the correct objective that you can attain. Franchises make money by pursuing a variety of objectives, including boosting income, popularising the brand, seizing new markets, and fending off competitors.

Virtually any reputable company may be sold as a franchise, but it is important to properly prepare all the paperwork and present it well.

Here are the most important criteria for the buyers:

1. The level of profitability;
2. A fast return on investments;
3. The amount of the initial investment.

The franchise’s territorial reach, degree of effect, and harmony between investments and profitability are among the other requirements.

Solid franchises make money are simple, distinctive, and cover the free market share. They have a proven business model, are the most efficient, and avoid tedious copying.

Every time you pass a McDonald’s, you’ve been witnessing evidence of how successful these company owners can be for your whole life.

There are 36,525 McDonald’s restaurants around the world today, 21,147 of which are owned and operated by franchisees. (The rest are company-owned or are licensed otherwise).

Do you believe the success of these individual McDonald’s outlets (on average about $2.6 million in revenue per year) is due to the brilliance and talent of the franchisees who operate them?

Do you really think the McDonald’s corporation managed to find extraordinary entrepreneurs to run those 21,147 outlets?

Or is it more likely that these franchisees are ordinary people and that the McDonald’s system is brilliant on its own?

That is, of course, the latter.

Franchises make money if they have a proven business model, and an established method, which makes them far more likely to succeed in business than an average start-up.

They may adhere to step-by-step techniques. They have a very good chance of success if they adhere to the guidelines.

In fact, certain company concepts are more successful than others.

What branches are the most popular?

1. Almost 60% of the whole market is for small retail establishments: shoes, clothes, cosmetics, and accessories.

2. 20% is for catering institutions: different cafes, restaurants, pubs, sushi bars, and fast food restaurants.

3. 10% is the service sphere: gyms or fitness centers, travel agencies, legal firms, dry cleanings, and beauty salons. But it is extremely important not only to give the information to the clients but also to educate the staff, as the quality of your service depends on it.

4. Manufacture – about 10%: here you need the biggest investments, but the profit will be good too. As a rule, you sell the ready business plan, give your name and all the necessary equipment to the buyer, educate the staff and, in most cases, help to sell the products.

You should consider the reorganization process and potential cooperative relationships with your future coworkers if you want your franchises to be profitable.

To effectively sell your franchise, protect your partners’ interests. They sense their dependency on you and don’t want to face their challenges on their own.

Obviously, you do not have to find solutions to all of their issues; all you need to do is provide them with the necessary assistance and knowledge.

Bring to their notice the necessity of performing thorough work on all applications and providing courteous responses to all phone calls.

Establish a distinct division that just deals with sales and gives franchise assistance.

Further, it will be helpful for you to read some guidance from knowledgeable experts in this field, whose franchises make money:

1) A franchise begins with a famous brand. If no one is familiar with your brand in the marketplace, nobody will work with you. Several analysts think that when consumers choose whether to purchase a product or not, the brand accounts for 80% of their final decision. So, you should make wise investments in marketing and advertising, have a specific segment of the market, have a high income, and hold various presentations and unique events.

2) Don’t chase for the price. Better getting more and more partners than waiting for the one, which will agree to work together.

3) If the competent partners don’t ask for your help and support and do everything themselves, give them a discount for their monthly service fee.

4) The contract about your franchising should be very accurate and competent. Check it with professional lawyers.

5) Don’t be lazy to check all your partners regularly. Make the timetable of the checks.

6) Don’t be afraid to spend money on your workers’ education: it will give you a good profit in the future.

7) Don’t forget about advertisements and working with social media.

8) Check your partners’ credibility and integrity.

9) Help your partners, so that they wouldn’t feel sorry for their invested money and bond with you much.

10) Mind your reputation. A good franchise has the trust of the buyers, partners, and suppliers. It is a nice beginning for your project.

Franchises make money if you treat customers well, look out for their best interests, and seek compliance with the rules.


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