How to Build a Successful Franchise

Photos: Unusual Enterprises and the People Who Run Them

Launching a new franchise in a post-recession world might seem like a scary move, but with a few smart choices, it’s possible to do it successfully. So how do you get off on the right foot? We spoke with two successful franchise owners who shared their thoughts. Roberta Hipes owns a Plato’s Closet store in Williston, Vt., where she sells used clothing and accessories and averages more $2 million in sales a year. Bill Marble, a former vice president of McDonald’s Corporation, now runs five Five Guys Burgers and Fries franchises in Oregon and Washington, which total more than $8 million a year in sales. Their advice:

Roberta Hipes, Plato’s Closet franchise

Sell What You Know

Hipes says it helps to pick a franchise in an industry that you’re familiar with. Prior to owning Plato’s Closet, she successfully ran another used-clothing store, so branching into used teen clothing “was a natural progression.”

Play to the Times

The effects of the recession aren’t going anywhere soon. So offer a business that consumers can appreciate in this economy. Hipes’s product fits into this theme nicely, since her store offers clothing for 30 percent off the retail price, appealing to bargain hunters.

Survey Your Location

There are certain areas that will respond better to a product than others. Study the demographics of your target area, everything from age range to income brackets, to determine whether there are enough potential customers. You need to make sure there are enough people to support your business “before you even think of opening it,” Hipes says.

Pick the Right Partners

When you’re getting a franchise off the ground, it’s important to have a loyal team, says Hipes, who runs her store with her sister and mother. For her, family is the best option. Each family member has a different responsibility in the business. “We trust each other and we all have a vested interest,” she says.

Consider the Workload

Some franchises are more time-intensive than others, so take a close look at the business to determine the effort involved. Explore the amount of time it takes to process the product once it goes through your doors, and whether you can quickly train staff to learn the business, which will alleviate your workload.

Bill Marble, Five Guys Burgers and Fries franchise

Do Your Homework on the Company

Make sure your parent company has a pattern of sustainable growth. Also, ensure that it gives extensive support to its franchises and provides a significant return on your investment. Marble says he spent six months investigating a variety of businesses to determine which one had the most potential.

Know the Market

Evaluate whether there is a sustainable demand for the product that your company would be selling. Ask yourself: are there many competitors in this segment? What does your product offer that’s different? Five Guys, for example, responds to the new “fast casual” trend, offering better-quality food at more-reasonable prices.

Pick a Brand You Love

“You have to believe in what you’re selling,” says Marble. So it’s not enough to just target a company that could be profitable. You have to genuinely be a fan of it. Simply put: if you don’t love it, don’t do it.

Get the Finances Together

Hire a CPA who can provide guidance and direction for proper business management. Marble says many businesses fail because franchise owners don’t take the time to understand the finances involved.

Treat Your Staff Well

You want to acquire and maintain a quality workforce from the start. To do that, be nice and give them reasons to be motivated. Marble offers bonuses of 50 percent to 70 percent on top of a worker’s salary for great performance.