Franchises and Profit

graph upEvery franchise partner or potential franchise partner inevitably asks “How much money can I make?”. Pointed and valid question, but its not always easy for Franchisors to answer.

The truth is; profitability is dependent on your overall ability to manage and control variable costs, the location and traffic patterns, market trends and the effects of the local economy, as well as many other items outside the franchisor’s control.

So what can the franchisor control to help you be as profitable as possible?

– Location Services; location selection, lease negotiations; a good franchisor learns and understands the market. They help negotiate the best rate – best landlord improvement allowance to help you get up and running
– Training; a good training program is integral to your success and your understanding of the business. Franchisors can’t teach acumen, but they can teach all aspects of their business from top to bottom. Ensure the franchise you choose has a multi-level training program outlining financial, operational and marketing protocols.
– Furniture and Fixtures; pick a franchisor that negotiates the best price for you! not them! Franchisors make money off of selling you everything you need. That’s the business, but choose a franchisor who has a fair mark-up, one that has been diligent in selecting the materials for build-out, equipment package, the contractor, Architectural and Mechanical and Electrical engineers. A good franchisor has developed a system that has all of these relationships in place and utilizes those relationships to their advantage. Ask your franchisor about architectural costs, more often than not, they are not required….
– Branding; this one goes without saying…….but just because you buy a recognized name, doesn’t mean you’ll be making money. A franchisor’s brand is one thing, but as mentioned above, find a franchisor who cares about you and your ability to make and maintain a profit. We’ve seen plenty of brands rise and fall because they haven’t made it about you, but them.
– distribution; or cost of goods sold. inherently, franchises have a product to be sold. Ask yourself where this product comes from, what makes it unique to other suppliers, most of the time, its cost. Your franchisor should have tremendous buying power on these products and pass it along to keep you competitive

Rob Hilditch, VP of Business Development, Joey’s Franchise Group
Joey’s Restaurants | MVP Modern Barbers | Homes & Land Magazine
1-800-661-2123

2020-05-05T15:23:47-06:00January 20th, 2014|Blog Feed|