The Four Pillars of a Successful Franchise

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As Richard Branson once said, “A big business starts small.” Franchising is one way for an entrepreneur to take a successful idea and create a global business empire.

In order to make a franchise successful, there are numerous factors to consider. We've boiled them down to four main principles:

1. Operations

It’s crucial to have an operations manual in order to run a successful franchise/company. The purpose of the operations manual is to organize, document and communicate operational requirements, systems and procedures for the franchisor and the franchisee. Consider the manual a toolkit, or bylaws for the business. From personnel to bookkeeping to quality controls, the manual documents the entire franchise’s protocols and procedures to operate within the brand concept.

An operations manual gives the franchisor the ability to provide training, support and an operating tempo to its franchisees, both before and after the initial launch.

Pro Tip: Franchise disclosure documents should be reviewed once per year, thereby keeping all parties on the same page.

2. Sales

You franchise so you can quickly scale your business without various risks such as debt and employee issues, but you also franchise to make money through franchise fees, add-on fees and royalties. In order to expand your franchise, you could hire a consultant or broker. However, the owner of a successful and profitable franchise unit is your best salesperson because they help you sell more franchises!

Your top-performing franchisees are well-versed in the industry. They are profitable and pay royalties. Franchisees already have a vested interest in the health and well-being of the franchise brand. Who better to help the franchise system grow?

Pro Tip: Offer financial and other incentives to entice your best franchisees to open additional locations and grow their business.

3. Finance

It's critical to have enough cash to get your business off the ground and on solid footing before considering franchising. Unfortunately, some franchisors fail because they don’t account for various expenditures such as marketing, legal, accounting and payroll costs. In addition to having a lawyer, you should also have an accountant with experience in the franchise industry, since the business is audited once a year. Additionally, your accountant can help you to structure appropriate internal controls, draft business plans and make decisions regarding budgeting. Your accountant is one professional that should be with you every step of the way during this process. This type of investment requires a lot of forethought and planning.

Before you consider franchising your business, you should have answers to the following questions:

  • What fees do you intend to charge, and how much will each amount to? What percentage of the royalty fee can/should be charged?
  • How big will each franchisee's territory be?
  • In which locations will you seek to establish units?
  • How will your training program be structured? What method will you use to carry it out, and how long will it last?
  • What marketing strategy do you have in place?
  • What level of experience and capital will you demand from your franchisees?
  • Will your franchisees be required to purchase certain items from you?
  • What is your exit strategy?

Pro Tip: Make sure you have a detailed management strategy plan and are well capitalized.

4. Strategic Hires

The most important part of strategic hiring is investing in a strong management team and a rock-solid marketing team. These hires will allow you to maintain a constant focus on growth goals and company strategy.

Employees are a key factor in success, so attracting top talent is critical to the success of any business. With the right team in place, you can increase productivity as a franchisor while also providing the high-quality customer service and experience required to drive profitability to your franchisees. If you get this part right, the rest of the steps become much easier.

A purpose-driven hiring system can help reinforce a structured hiring process. Hiring efforts can be coordinated across multiple hiring managers and locations using the same process and job content. When running a franchise business, consistency is critical for maintaining quality and compliance.

Pro tip: Hiring experts in each area – operations, sales, marketing, and finance – should be your number one priority.

Becoming an entrepreneur takes blood, sweat and tears, but once you create a successful business, there are ways to increase its value through franchising. The process can seem tedious and sometimes overwhelming, but with a solid concept, strategic plan, seasoned management team and enough capital, you can be well on your way to being a successful franchisor.

For more information, and to connect with our team of franchise accounting professionals, visit


By: William St. Clair, Partner