For many entrepreneurs, franchising presents an appealing business opportunity due to the unique hybrid of “big brand” support and small business skill. But this is not a sure fire way to success. Owning a franchise presents its own set of challenges, and failing locations are a harsh reality of the industry. But in failure there is opportunity. If you are a current franchise owner with a struggling location or an entrepreneur looking for a potential investment, there are several steps you can take to turn around a failing location.
To resuscitate a failing franchise, you must immediately invest in hard asset improvements. Take inventory of what the franchise already has, and figure out where improvements are needed. That may be a new vehicle, new crisp uniforms or even new marketing material. Choose what best fits your needs and budget. Making asset improvements right off the bat will also help improve company culture. Continue to make asset improvements during the first six months and build those costs into your development budget.
Get to know the team
With franchises, the success is in the ingredients. Your team members are your most important ingredient. Thus, it’s important to know your team in full. Get to know the employees, understand their role, what assets they bring to the business and where they need to grow. Establishing a solid culture amongst team members is key, so you should not be afraid to make this process personal. Consider giving your top managers and key employees a copy of Who Moved My Cheese?: An Amazing Way to Deal with Change in Your Work and in Your Life by Dr. Spencer Johnson to help them determine who they are. This will also help identify team members’ strengths, and utilize them accordingly.
Tap the management’s expertise
Ascending on a failing business provides an important advantage: You have the opportunity to assess what didn’t work. Use the existing management team to help achieve this goal. Work with them to develop a growth plan and have them come up with a “right and wrong" log based on what happened previously. This will help paint a picture of the business before you arrived, and will also signal to your management team that you value their insight. Your management team is your front line and may just have the key to lift the franchise from its poor performance. Allow and trust the people who have previously worked within the franchise to establish what worked and what did not work previously so you can improve the business moving forward.
Pay attention to community relations
A franchise is very much tied to its location. That’s why it is so important to focus on community relations. Establish or re-establish local relationships that were most likely negatively impacted during the business’ downturn. This may include the local chamber of commerce, non-profits and government. Meet with influential members of the community and let them know that you have taken over and need assistance reviving the franchise. A helping hand from within the community can be incredibly impactful.
Evaluate the marketing landscape
For any consumer-based business, marketing is vital. That’s why it’s so crucial to evaluate all marketing completed or not completed and thoroughly understand the current marketing program. Compare current efforts to what the franchisor recommends and connect with a top performer within the franchise to discuss their strategy and spend. Make sure you connect with a fellow franchise owner whose location caters to the same financial, cultural and geographical demographic. This will help to give a sound overview and guideline of what needs to be done to achieve success within your own franchise location.
For some franchisors, a struggling location is a sign of failure. For others, it’s a sign of opportunity. Just because there is struggle doesn’t mean there is no hope. Making calculated decisions about your business can greatly impact your bottom line. And ultimately, you can turn a failing franchise location into a successful business.
Stephen Bienko is a serial entrepreneur and current owner of several franchise locations of College Hunks Hauling Junk and Moving.