4 Things to Consider When Investing In A Franchise

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Are you considering taking a step into the brave and not-so-new world of franchising? Congratulations! The first thing you need to do (and maybe you already have) is choose a brand for your investment. Sounds pretty simple, right? If all you have to do is a quick Google search to find the franchise brand for you, what’s all the fuss about?

This initial part of the process requires some due diligence to ensure the franchisor aligns with your passions, has a stake in improving the community or territory your franchise will be located in, and is devoted to franchisee training and success.

But wait! That’s not all.

There are four key factors we think are essential to consider when you’re ready to make your franchise investment.

1. Franchisee Turnover Rate

Turnover isn’t just an aspect of corporate life employees have to contend with. Franchising is rewarding, but it is still a business dictated by consumer demand, the economy, and the franchise brand’s success.

Franchisees can measure potential success by looking at the number of franchise locations that ceased operation or were terminated over the past five years. Gauging a franchise brand’s turnover rate can help prospective franchisees consider the overall market risk before signing on the dotted line. According to Franchising USA Magazine, the average turnover rate among franchise systems between 2010 and 2014 was around 10%.

Fortunately, with The Cleaning Authority, there isn’t much risk by way of turnover as we are the leader in this $46 billion U.S. market. In fact, we’ve added five new locations in the past year. We currently have 225 franchise owners around North America, and that number is steadily growing because of our flexible investment options prospective franchisees can choose from.

2. Brand Revenue Generation

Profitability is probably one of the most notable reasons entrepreneurs decide to invest in a franchise. However, very few consider the brand’s revenue generation. A franchisor needs to show potential franchisees their financial and personal investment is worthwhile. After all, if the franchisor isn’t doing well financially, franchisees will suffer from a lack of resources, training tools, and support.

The three primary revenue sources for franchisors you should look at include:

  • Initial and subsequent franchise fees
  • Royalties
  • Mark-up of goods or services sold to franchise owners

An imbalance in any one of these factors can be an indication of future risks for prospective franchisees. As reported by FranchisingOpportunities.com, The Cleaning Authority is the largest per franchisee revenue in the industry, serving over 100,000 customers. Our franchisees have generated close to $2 billion in cleaning revenue. We have consistently high recurring revenue plus outsourced marketing execution that makes for low franchise risk.

3. Franchisee Growth

Regardless of the industry, company, or role, if you’re interested in growing with a business, that means you’re most likely in it for the long haul. What franchise owner wouldn’t want a stable, long-term growth path? It suggests franchise health and the brand’s commitment to ongoing training and development.

You might think immediate and rapid growth tells prospective franchisees that success is imminent. And while that may be true, such expedient expansion could create management strain or shine a light on the franchisor’s lack of growth plans.

We believe in top-notch support systems for our franchise owners, providing you with customer acquisition experts and technology department staff. With our hands-on, operations-focused corporate team, you get comprehensive and ongoing franchisee support, so you have every opportunity to grow with us.

4. Brand Culture

A brand’s internal culture is significant to the franchisee-franchisor relationship, acclimation into the brand’s infrastructure, accomplishing objectives, and so much more. Culture can also determine how brand executives view franchise owners—as a source of revenue or a resource to drive future revenue?

The best way to assess franchisor culture is to:

  • Interact with as many current franchisees as possible and find out about their experiences.
  • Pay attention to how leadership teams communicate with franchisees and if that communication is consistent and applicable to success.
  • Ensure that franchise training teams are willing to listen to others’ opinions and consider them.

The Cleaning Authority has a healthy culture that ensures all franchisees have the resources and training to mitigate risk and increase success. When you express initial interest in us, we set you up with a franchise development team member who can give details of our process from start to finish. From there, we validate your decision by matching you with a current franchisee who can relay their experiences. Our healthy brand culture is designed to help new franchisees smoothly adapt to their new role as business owners.

We hope you’ll consider opening a franchise location with The Cleaning Authority and joining our expansive and robust franchise network. For more information, call (888) 706-3615 or get in touch online.

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