7 Signs You’ve Found a Proven Franchise Brand

What is a proven franchise brand? In the franchise world, there is some confusion about what people truly acquire when they buy the rights to a franchise. Having that clarity is essential when investing in a franchise to prevent misconceptions, deception, or false expectations.

When you buy a franchise, what you are acquiring is, ideally, a proven brand. And as such, it should have four distinct elements:

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• A Product or Service

A founder, a creator, or an innovator at some point in time created a business with a product or a service that customers were willing to give them money in exchange for that product or service. This could be a food concept, retail products, or maybe a service like a massage, a car wash, in-home care, or a gym. 

• The Service Process

It involves how the product or service will be delivered to the consumer and how they experience it. For example, if you’re in food service, this could be in the drive-thru, at the counter, or in delivery. If you are a retail business, it could be at the store level, at the counter, or maybe online ordering. If you're a service brand, you may provide it in your unit or go to the client's house.

• The Image

That means everything the customer sees, touches, smells, and physically experiences around that product or service. It includes the name, the logo, the colors, the building, the employees’ uniforms, and the decoration of the building. It also includes the image of the trucks, vans, motorcycles, or bikes where you make your deliveries, in case you offer them. I know of some spas that even have a specific fragrance that represents them, and the moment you walk into the spa, you can smell that scent.

• The Marketing Experience

It involves how they communicate to the consumers or potential consumers that this product or service exists, to have brand awareness. Depending on the brand's age and maturity, this may also include marketing campaigns to increase sales in exchange for an additional marketing fee, but not all franchisors charge that.

These four elements are precisely what you acquire when you invest in a franchise: a product, a service process, the image, and the marketing experience.

Together, they build a franchise brand and the promise of consistency. This means that when a customer experiences your product, service process, image, and marketing, they will expect to receive the same experience each time they return to your business, even if it’s at a different location, state, or even country!

If they don't, then the franchise brand is not good because there's no consistency. A brand is a promise of consistency, and this is one of the key success factors in the franchise industry. 

What Franchisors Give Franchisees

You shouldn’t get confused about what you'll get from a franchisor. Their job is to create the processes, procedures, standards, and policies that ensure franchisees can duplicate that proven brand and that the customer receives a consistent experience every time they experience that brand.

Some people think that their franchisor is going to teach them how to manage people, how to read a profit and loss statement, or how to control costs. However, the franchise agreement doesn’t include any of those promises. 

That will be the equivalent of giving you a business degree in small business management, and if they were to provide you with that, they would have to charge you a lot more money. 

What happens with these other critical systems, then? Those are the business systems that you, as an investor or entrepreneur, should figure out on your own to turn that brand into profit. 

#MiniTip: Create policies, processes, and procedures for your business

7 Characteristics of Successful, Proven Franchise Brands

As I mentioned earlier, when you invest in a franchise, you get a product, the service process, and the image, and if you pay a marketing fee, you also get marketing support.

How can you identify when this brand is a proven one? As a potential franchisee, you should look for an investment that has these seven characteristics to increase your chances of having success if you were to invest in it:

• Warning: I'm not saying they will guarantee success, but you will likely have more success if these seven elements of the proven brand exist. 

And remember. You still have to handle the business management, which is an entirely different conversation.

1. Consistent and Adequate Revenue

That means that these brands have proven to generate enough revenue, month to month, not only to cover the cost of the business but also to leave you the leftover profit you expect when you make a franchise investment.

2. Favorable Unit Economics

The second characteristic of a franchise-proven brand is that the business model can attract enough customers to bring sales, cover their costs, and leave profit for the investor. 

You must evaluate these numbers on averages. That means that the financials should consider an average franchise unit, run by an average manager doing an average job, and generating average sales or revenue to cover costs and have an average franchise profit.

That would imply that if you do an excellent job and learn how to do the business side of this franchise, you will have more profits than the average.

Keep learning: How to Make $1M with a Franchise

 

3. Multiple Locations

The third characteristic of a proven franchise model is that it has numerous locations, ideally, in various areas or demographics, and even states. That means that the brand really transfers to different places and could work well either in a small town in Texas or a large city like New York. 

You also need to ensure that this particular model works where you plan to open your unit. For a brand to be proven, this characteristic must exist. 

4. Operating and Documented Systems and Procedures

The franchise brand should have a very robust and detailed operations manual that leaves no space for deviation from the standards that make that model successful wherever you are. 

If they don’t have this manual, it might indicate that they are unclear on how to manage their business, and they may modify policies from time to time.

If that's the case, it's not a proven model yet. 

• A proven model has consistent, systematic, defined, and documented processes and procedures for everything that has to do with duplicating that model. 

The last thing you want is to invest in a model that you have to figure out how to provide the service of that particular product or service, where to get the products from, or what the image standards are. 

5. Training Materials, Tools, and Resources

Franchise-proven brands teach all of the franchisee employees, and the franchisees themselves, how to duplicate the brand. They put all of that information in an operations manual. 

However, having the ops manual doesn't do you much good if you don’t have the tools to transfer that knowledge to the employees who will do the work. 

That's why you must have a very good, high-quality training process, procedures, tools, and resources to duplicate that brand. 

Don’t miss: How Can Franchisors Help Franchisees?

 

6. Capability for innovation and adaptation throughout time

This means that the franchisor is ongoingly looking for ways to be better, not only in the product or service, but in other areas like technology, so that the franchise network doesn’t fall behind.

Proven brands can innovate, adapt, adjust, and reinvent themselves to stay modern. When exploring a brand, look for these qualities and ask how they generate innovation and respond to changes in the economy, industry, and consumer behaviors. 

If they can adapt, that will indicate that this is a proven brand. 

7. Longevity

The seventh, and most critical characteristic of a proven franchise brand, is that it has lasted for a long time. These brands have been around for years, have grown or maintained their existing locations, experienced ups and downs, and even faced natural or man-made disasters, but they are still around and are successful in their industry. 

One caution, though. If there's a change of ownership or leadership, things could change pretty quickly. That’s why you should look at who the leader of the organization is and who currently owns the brand. 

I know brands that have gone as far as 5,000 units, and today they're less than 300, because of that change in leadership, policies, and the culture. 

Those are the seven characteristics of a proven franchise brand. I hope this gave you a pretty clear idea of what to look for in a franchise to ensure you acquire a proven brand that can increase your chances of success.

And if you are a franchisor, measure up against these characteristics to confirm that you have a proven brand that will attract not only customers but also potential franchisees.

Reflections:

• Are you clear on how the franchise model actually works?
• Does the brand you are evaluating offer the four elements of a proven brand?
• Do you have a franchise brand checklist to track what you are looking for in a franchise?
• Have you studied the unit economics of the business model you want to invest in?