Operations

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When Is It Time to Expand Your Franchise Operations?

When Is It Time to Expand Your Franchise Operations? 1016 528 Sprockets

There are a number of important clues you should look for when you are trying to decide when to open the next franchise location. Expanding your franchise operations takes more than a desire to make more money. You have to make sure there’s a large enough customer base and strong enough demand for your product to make the new location a success. 

We have been providing franchisees with the staff they need to successfully expand their franchise operations for many years. We have the expertise and experience to help any franchisee get the staff they need to grow their business at just the right time.

Expanding Your Franchise Operations

Important Considerations

Expanding franchise operations is a major step. It’s one that should not be taken without taking several things into consideration. They include:

  • Are there too many customers for your staff to handle at your current location?
  • Can simply increasing the size of your shop or restaurant handle the overflow?
  • Is your customer base large enough to make a second franchise location profitable?
  • Have you identified the right location for your second business? 
  • Can you find the right people to staff it?

When to Open Your Next Franchise Location

Some of the key factors that can help you decide when to open the next franchise location and ensure it will have a high probability of being successful include:

1. You Have Several Regular Customers

If you have a large number of regular, loyal customers, and your customer base continues to grow, that means there’s a consistently increasing demand for the product or service you provide. No matter what type of franchise you have, repeat customers are the key to success. Don’t base your decision on expanding franchise operations on one sudden spike in customers at your current location. When you see a stable, recurring revenue stream year-round, you should seriously consider opening a second location.

2. Customers Often Ask You About Opening Another Location

If many customers that regularly spend money at your current location keep asking you when you are going to open a second location, it might be time to grow. Being able to better satisfy your customers should be the motivating factor behind expansion plans. Plus, if customers routinely travel a long distance to purchase your products and services, expanding into a second location makes good business sense if you grow based on customer requests and their consistent purchasing patterns. 

3. Your ROI Is Steadily Increasing

If the profit you make from your current franchise location is consistently increasing, it could be a sign the market can support your expansion into a bigger or second location. This decision should not be based on short-term success. However, if the size of your customer base, revenue, and profits show consistent, long-term growth, expanding into a second location could be a lucrative business decision. The key is to make sure that you see a pattern of consistent growth. If customers are satisfied with your products or services, a second location can enable you to profitably serve more customers in a wider area. 

4. Your Franchise Is in a Growing Industry

Before deciding to expand into a second location, study the trends in your industry. If your research shows your industry is growing, now might be the right time to open a second location. Opening a second franchise location is a great way to take advantage of the opportunity for increased income, growth, and stability. By opening up another location, you not only reap lucrative short-term benefits, but you can also future-proof your franchise by providing customers with new products or services.

5. Your Current Location Has Too Much Business

If your franchise is attracting much more business than you can handle in your current location, it might be time to grow. Don’t wait until overcrowding or customers having to endure very long wait times for service begins to hurt your business. If just expanding franchise operations to a second location will allow you to better manage consumer demand for your product or service and even bring in more customers, take action. We can help you hire the additional employees you will need to serve customers at your new location.

6. You Have Done Your Due Diligence

Opening and running a second franchise location requires funding, franchisor approval, potential structural changes, as well as assessing growth potential and possible liabilities. If you’ve done your due diligence, and your calculations look overwhelmingly positive for the outcome of an expansion, and the only real question is when to open the next franchise location, it’s time to open a second location and grow your business. Double-check the details, get professional financial advice, and take the plunge.

7. You Have the Skills, Resources, and Opportunity for Growth

Creating and growing a business requires a unique set of skills, abilities, resources, and opportunities. It also requires vision and courage. In business, there’s no such thing as “a sure thing.” However, if you have the skills, resources, and opportunity for growth, don’t let fear hold you back. Do an evaluation of your business skills, customer base, and potential market size and share. If they all are in your favor, the time is right for you to expand into another business location where new customers are waiting to spend money with you.

8. You Have the Right Team

Running a franchise profitably and successfully requires a team effort. You must have the team with which to share the burden involved in the day-to-day details of managing two business locations. If you have a team with the expertise, focus, vision, customer service, and time management skills needed for a second location to prosper, you are ready to grow. If your team is equipped to take on the challenge, delegate some responsibility as necessary and go for it.

9. You Have a Trusted Network of Outside Experts

Outside experts can give you the help needed for your growing business to prosper. If you have a network of outside experts to give you the help you need, you are ready to expand into a second location with your business. Being willing to listen to and follow the advice of the business experts you hire is essential for success when you expand your business to a second location.

10. You Have Help Hiring the Right New Staff

A woman showing a laptop screen of the Sprockets hiring platformYou know it’s time to open a second location when you need to hire several new employees to serve the large and growing customer base. We can help you to hire the right new employees you need to help your current staff with the increasingly demanding workload.

Sprockets empowers you to hire applicants that are such a good fit that it might seem like magic. However, it’s a result of combining technology, logic, and psychology to identify which job applicants are most likely to be as effective in performing the job as your best employees.

We interview your franchise’s top employees and use artificial intelligence to recommend employees that have similar characteristics. Our sophisticated solution makes expanding your franchise operations easier and much more likely to be successful.

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How to Maximize Your ROI as a New Franchisee

How to Maximize Your ROI as a New Franchisee 1016 528 Sprockets

If you want to get out of the nine-to-five rat race, become your own boss, and you have some seed investment money set aside, your best bet might be venturing into franchising opportunities. Let’s dig into it and see how a franchisee’s return on investment can be maximized.

Kick-Start the ROI of Your New Franchise Venture

Choose the Ideal Franchise

Once you decide your path is with a franchise, you’ll need to choose the right franchise brand for you. There are numerous franchises out there, so it is a big undertaking to choose which ones offer the most profitable opportunities. Of course, saying this is easy. Making the decision is not. There are several considerations before you find your match made in heaven. 

Conduct extensive research by completing these tasks prior to your decision:

  • Reach out to various franchisors for information
  • Talk to other franchisees about their experiences
  • Consider your initial finances
  • Research your intended location

Build a Business Plan

Preparation is essential if you want to maximize the ROI of your new business venture. While many franchisors provide new franchisees with proven business plans, you might be left to your own devices with certain companies. Don’t worry, though. Simply view our blog on how to build a business plan for a new franchise location. It features a step-by-step walkthrough to help you get started on the right foot.

Track Performance

You won’t be able to improve the ROI of your franchise business if you don’t track performance metrics. Set up a list of business goals and key performance indicators (KPIs) to keep long-term goals in mind while still focusing on the day-to-day operations that drive success. Note: always make sure you set measurable goals rather than abstract ones that are difficult to track.

Then, set aside time monthly, quarterly, or annually to identify areas that need improvement. Find out what went wrong, make a plan for how to get better, then put your plan into action. With hard work and little luck, you’ll stay motivated, surpass your goals, and be able to continuously set the bar higher.

Hire Applicants Who Will Drive Success

Two people shaking hands during an interviewDid you know that employee turnover can cost employers upwards of $5,000? This can drastically reduce the ROI of your franchise when you think about how many employees you might lose over the course of a year. Not only do you lose productivity, but you also need to spend time and money recruiting, screening, and training the replacement employees.

Avoid costly turnover with Sprockets’ sophisticated solution to hiring! We combine natural language, artificial intelligence, and over 80 years of experience to find applicants who are the precise fit for your needs — and are likely to stay long-term. It might seem like magic, but it’s not. It’s logic.

Two smiling women and text reading "10 tips for Creating a Positive Company Culture"

10 Tips for Creating a Positive Company Culture

10 Tips for Creating a Positive Company Culture 1016 528 Sprockets

Franchise company culture plays a large role in a company’s success. A positive company culture will encourage employees to work harder and stay with your company longer. Employees will also look for ways to help the business become more efficient and more profitable. When your people are happy, they pass the savings onto you. Here are some tips on how to create a positive company culture.

Here’s How to Create a Positive Company Culture

1. Prioritize Health

The world has recently come out of a pandemic, and health is more important to employees than ever. If you want to create a positive company culture, you need to make employees feel safe and healthy. Do this by providing adequate health insurance for full-time employees. People should get their insurance within 3 to 6 months after their start date. You should also encourage employees to work from home when they aren’t feeling well. Finally, you should make sure employees have plenty of physical space between each other. You can also install hand sanitizer stations and reminders on how to stay healthy. Healthy employees show up to work more and work harder. 

2. Use Standardized Metrics to Measure Performance 

Employees need to feel that there are fair metrics in place to judge their progress at work. You can gauge things based on productivity, sales, or a number of other metrics. Make them clear to everyone. You should also make it clear how you calculate the metrics so that employees understand what they need to do to help you gather accurate data. This helps you learn what your employees are doing every day and how much they can accomplish. You can use the data to adjust the metrics as you see fit. 

3. Get to Know Employees 

You need to make a point to get to know your employees on a personal basis. You can do this with casual meetings in both a group and one-on-one setting. You can have other meetings to talk about performance. These meetings should involve learning what motivates your employees and their thoughts about working for you. If meetings aren’t your style, make an effort to get out into the workspace to answer questions and help when the real work is going on. You will be able to show your expertise while getting to watch your employees in action. 

4. Request Feedback 

Running a company can mean that you focus on the big-picture ideas as opposed to the day-to-day operations of your organization. You may not be able to properly see the things that could use improvement. Who better to suggest improvements than the people who work there every day? Provide an anonymous suggestion box or anonymous surveys to allow people to express their thoughts. You can also establish an open-door policy that gives people the chance to voice any concerns to you in person when a certain problem comes up. 

5. Encourage Diversity 

People have struggled and worked for years to become equal to other people simply due to their skin tone, country of origin, gender, sexuality, or age. As the leader of your organization, you need to go out of your way to create an environment of inclusion. Start by hiring a professional who can consult on ways to increase inclusion in your business. If you do notice any form of discrimination, it needs to be taken seriously. Investigate all complaints immediately. Establish clear consequences for anyone who hinders your efforts of diversity and harmony. 

6. Recognize Hard Work

Many employees don’t feel adequately appreciated in their current position. When you see an employee doing a good job, you should make a point to celebrate their efforts. Acknowledge them in a public way. You can also give them some sort of monetary reward for going above and beyond. Hopefully, other employees will be encouraged to work hard, too. 

7. Create Clear Core Values 

When you clarify what your company stands for, these values can guide you in the right direction during your daily dilemmas. Make sure that all employees in your company know your core values, too. The idea is to get them to go through the workday with those same values instilled in them. Write your core values down, go over them during orientation, and reiterate them once or twice a year while also placing reminders around the workspace, whether it’s an office or a restaurant.

8. Promote From Within

Many employees don’t appreciate being at a job for years only to watch someone else come in at a higher position who doesn’t know the ins and outs of the company. You should only hire people that you can see promoting down the line at some point. Instead of hiring C-level employees, you can promote within and hire entry-level employees to train. Always keep your eyes open for who is truly making an effort at the company.

9. Set Standards 

You want your employees to like you, but you also want your employees to behave in an appropriate manner. Establish standards and hold people to them. If you let employees get away with anything, they will do just about anything. Some common expectations include regular attendance, proper customer service, and appropriate behavior in the office. Establish consequences when an employee does not meet your expectations, and stick to them. 

10. Have Fun

Just because you are at work does not mean you can’t have any fun. It’s okay to joke around with employees and let employees joke and laugh and have fun. Encourage social outings after work and allow people to be silly. For some workplace culture examples, you can even provide games in the break room or ice-cream socials once a month. These little extras can make an employee want to stay. 

Hire Applicants Who Will Contribute to a Positive Environment

Two men shaking hands at a restaurantOne of the best ways to create and maintain a positive company culture is to hire people who will help make it happen. Luckily, Sprockets empowers you to do precisely that. Our sophisticated solution to hiring combines natural language with artificial intelligence and over 80 years of psychological research to predict which applicants will succeed at your company and mesh well with your team. It’s not magic — it’s logic.

Schedule a demo today to see how the Sprockets solution works!

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How to Build a Business Plan for Your New Franchise Location

How to Build a Business Plan for Your New Franchise Location 1016 528 Sprockets

Currently, a lot of people are venturing into franchise opportunities. One of the many benefits of setting up a franchise location is that you will be riding on an idea that has already proven successful. However, just like any other business, setting up a new franchise location can also come with the same challenges facing any other business startup.

For instance, you’ll need a solid business plan. Building a good business plan for a new franchise location is essential. It helps you think through the obstacles you might face, strategies for overcoming them, and your intended investment’s overall sustainability. A good business plan is also essential if you need financing for your business. Most lenders and investors will demand to see your business plan before considering financing your business.

Building a Business Plan for Your Franchise Location

While some franchisors will help build your business plan or simply provide you with one, that is not always the case. Don’t worry, though. Below is an outline of a franchisee business plan example outlining the various sections included in a business plan for a new franchise location.

1. The Executive Summary

This portion of your franchise business plan should give a clear description of your business’ goals and its purpose in the short and long-term. This section includes basic information such as your business’ name, details of the founder, and location. It also consists of the mission statement, a list of products and services, and the target market. Please ensure you also state your credentials and experience in the field and an overview of your business success factors.

2. Business Overview

In this section of your business plan for a new franchise location, you must provide an overview of your business’ main aspects. For example, you might need to explain why your new startup is better and unique from the existing establishments.

It should be as forthright as possible so that anyone reading it will get a clear understanding of the scope of your business. This section highlights your business’ legal structure, the franchisor’s company history and success rate, and a complete list of all the products and services, inclusive of their prices.

3. Industry Review

Understanding the industry you want to venture into as a franchise is critical to your success. This section of the business plan can be divided into two parts: the industry’s general overview and the position your franchise intends to hold or fill in the overall industry. Consider current trends, the industry’s growth rate, major players, and national revenue.

4. Management Summary

The management summary section of the business plan should include a list of members responsible for running the business. These are the employees that will be mainly responsible for the day-to-day operations of your franchise location. Be sure to put as much of the members’ background information as possible. You can include past experiences, professional qualifications, past successes in the field, and any other information pertinent to their position. 

5. Consumer Analysis

The consumer analysis section of the business plan focuses on the target audience. In this segment, you must start by identifying who your potential customers are, express a clear understanding of the customers’ needs, and show how your products or services will meet those needs.

You need to be very specific when writing this section and exhibit a clear understanding of who your intended customers will be. For example, it would be too vague to say that your company is targeting middle-income earners. Be as in-depth and precise as possible. You might need to specify the exact range of income, age, and location of the customer, among other traits.

6. The Premises

Every business needs to operate from somewhere. You must agree with the franchisor on your business’ most appropriate location before writing this section. Some of the factors determining your choice of premises may include the location, expansion projections, cost, and planning consent from the property owner.

7. Sales and Marketing

In a franchise, strategies for sales and marketing are typically laid out by the franchisor. When writing this section, you will need to research their sales and marketing strategies, advertising, and any other kind of support they may offer you. You can also confirm with your franchisor if it’s alright for you to play a role in local advertising and marketing.

The following are areas you might want to consider when writing your business’ sales and marketing plan: marketing channels used by your franchisor, strategies for different business seasons, an overview of the sales process, and customer retention strategies.

8. Financial Projections

The financial projection plan is one of the most crucial business components; it is more of your business’ financial forecast and acts as a roadmap. Potential investors and lenders will look at this section more to determine their interest in having a stake in your investment. Most financial projection write-ups are appealing on paper. However, it can be of no value if actual returns do not justify it once the business starts running.

Avoid writing this section with the sole intention of impressing investors and lenders. Make sure you do thorough research to establish the real potential of the business you are venturing into to avoid losing money.

9. Financing

It is essential to prepare this section even if your venture is funded from your savings. This section describes the financial needs for starting up the business and how you expect to fund it. It is one of the last items on the list in your business plan. This segment is where you make your case to investors and potential lenders if you are trying to get funding from them.

Have a Hiring Plan

A man and woman shaking handsIf you are looking to hire employees and have difficulties identifying the right applicants, please feel free to contact us at Sprockets to learn about our AI-powered Applicant Matching System. We pride ourselves on helping companies hire applicants that are the precise fit for their needs, ultimately reducing costly employee turnover. Our sophisticated solution ensures that you hire people who will collaborate well with your other team members and stay long-term to see your company grow — and contribute to that growth.

Schedule a demo now to see how it works! It will be the best 15 minutes you spend on your business. Just ask some of our happy customers in a variety of franchise industries!

A new franchisee standing outside of his building and smiling

Achieving Success: Tips for New Franchisees

Achieving Success: Tips for New Franchisees 1016 528 Sprockets

Are you ready to launch a new franchise location? Between now and then, you must overcome many obstacles. Luckily, in this day and age, the answers are easier to find than ever. By checking out the following tips, you’ll have a leg up on the competition. That way, finding success with your franchise business will be easier than ever.

7 of the Best Tips for New Franchisees

Let’s look at a few of the most common traits of successful franchise owners. Of course, everyone’s situation will be different. Nevertheless, by comparing notes, you’ll notice there are some core commonalities. When you are ready to start a new endeavor, doing the research is more than worthwhile. By putting in the time, you’ll reduce the odds against you. Then, success is just a matter of commitment. At that point, it might as well be guaranteed.

1. Ensure You Have the Starting Capital

Without the money, you can’t launch anything. Therefore, ensure you have the starting capital. Otherwise, your time would be spent better on other ventures. For example, suppose you have limited funding. If that is the case, we suggest you pursue finance partners rather than customers.

2. Choose the Optimal Location

Even though your business has a well-known brand name under a franchise, that doesn’t mean it can succeed anywhere. Any experienced business owner knows that location is a significant factor in success. In certain areas, poorly ran enterprises might prosper. However, in other locations, even the most efficient endeavors might fail. By researching different locations, you can find one that fits you best.

3. Network With Other Successful Franchisees

Who said that you could not learn from other people? Of course, not everyone can give you good advice. However, by speaking with successful franchisees, you can find out what they have learned. Over their career, they’ve made many mistakes. Since you can ask them what they learned, you won’t have to go down the same road they did. That way, you can skip over some of the bumpier sections of the journey.

4. Continuously Seek New Information

You can compare yourself to other people all day long. However, you would get better results if you were to look at people who were successful. Generally speaking, they are all fast learners. Because they can pick up on things quickly, they can also adapt rapidly. In the business world, that is essential. By adapting to new circumstances, their companies thrive while others fail. If you’d like to follow in their footsteps, then it would be best if you were to emulate that trait.

5. Grow Your Business

Both you and your business should always be growing. Every year, set new goals. That way, you can have something to use while you measure your progress. By doing so, you’ll have a reason to stay motivated throughout the year. Unfortunately, many entrepreneurs fall off track after they get started. However, a small bump in the road doesn’t mean the entire journey must be derailed. Instead, use this as an opportunity to find out what went wrong and improve. Then, get back at it. Otherwise, you’ll have to learn the old adage: Failure is only permanent when you quit trying.

6. Maintain a Work-Life Balance

Besides your new business, you must also focus your time at home. At its core, your home life helps motivate you in the morning. When you wake up, rushing to work on that new project might not be exciting. However, if you have a balanced life, then working won’t be so aversive. Instead, you will be ready to seize the day each morning. By living a balanced lifestyle, your efforts will be rewarded when you focus on work.

7. Build a Strong Team of Employees

Two people working at a restaurant franchise locationWhile you are central to your company’s success, other people make your business run. As you are building your crew, evaluate each individual for their talents. You should only choose applicants who will thrive in the workplace and mesh well with the rest of your team members. The stronger you can make your team, the more successful you can make your business.

Luckily, there’s a convenient tool that makes hiring the ideal applicants a breeze. It’s Sprockets, an AI-powered solution that quickly and effectively creates a “fit score” for your applicants, empowering you to see who will drive success and stay long-term. It’s not magic — it’s logic.

Schedule your demo today to learn all about how Sprockets helps you hire the right applicants and reduce costly turnover!

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What Are the Steps to Becoming a New Franchisee?

What Are the Steps to Becoming a New Franchisee? 1016 528 Sprockets

If you think the business world is hectic, overwhelming, and confusing, you are not entirely wrong. It is probably worse when you are inexperienced about your venture. The franchise venture is rapidly becoming more popular, and it is easy to see why.

Becoming a new franchisee eliminates the costly expenses that come with starting your own business from scratch. For example, you will not need to generate a business model or patent it for trademarks. Other perks include advertising and product promotion, staff training, and support services.

Learn How to Become a New Franchisee

But how much do you know about becoming a new franchisee? Restaurants are quite popular in the franchise industry, but you can also venture into other industries. You could opt into real estate, the education sector, health and fitness, pet care, just to name a few. 

Is a Franchise Enterprise Right for Me?

The purpose of getting into entrepreneurship is different for each person, and so is the capital investment. If you are not so excited about taking business risks, franchises offer a decent safety net. However, there are several factors at play, and success is not a guarantee. 

Here are some things you should consider before you start a franchise process:

  • Take time and weigh the pros and cons of buying a franchise location. Does it serve your purposes in the way you intended? What are the cons to such a goal, and how will it affect your finances?
  • The markets are a decent guide on where to put your money, but it is highly advisable to settle into something that matches your skills, personality, and goals. Money is a huge motivator, but interest and skills are what get you through the tough times.
  • In addition, think about the future. Is this what you want to be doing ten years from now?

Understanding the Franchise Process

When all is said, how do you get the job done? What is the process of becoming a new franchisee? What are the new franchisee requirements?

We will break down the process into seven simple steps:

Step 1: Research Franchise Concepts

As we had mentioned earlier, there are many more concepts you can look into that are not restaurants. The International Franchise Association has over a thousand registered franchise businesses you can look into. Alternatively, you can look up other opportunities at FranchisesForSale.com. Talking to a professional will help clear the air in terms of what you want.

This research is instrumental in finding business opportunities that fit your budget, geographical specifications, and skills. There are some websites that will help you narrow down your options based on these factors and other preferences. Alternatively, you can talk to a professional about it.

Step 2: Send an Application/Request for Consideration

Have you found a franchise concept that sets your soul on fire? Do you have several options you are seriously considering? Submit your request for information. You will hear back from the company within a week or so, either via phone or email. They will also link you to a representative.

Step 3: Consider Legal Obligations

Now you are getting more invested with your company of interest, so it is time to take it to the next level. At this stage, you are learning in-depth information about every aspect of the industry. This will include the company, the business model, and the roles of both the franchisee and the franchisor. This information is delivered in the Franchise Disclosure Document-FDD. Go through the document with your lawyer and accountant.

This is a legal requirement by the Federal Trade Commission, and it serves to elaborate on the relationship between you and the franchisor, including required fees and commitments. The FDD can be pretty detailed, but ensure you read through it all. Start with what interests you. The document will also guide you on your obligations, and it dictates what the company will and will not offer.

Step 4: Training and Support

This might be the best thing about the franchise concept — all the heavy lifting is someone else’s obligation. The franchisor has researched the market, developed the concept, and created the product and service. In addition, the franchisor gets to share their trading strategies, training, and marketing programs with you. Of course, this often comes at a fee. 

At this stage, your franchisor should outline in detail the support you should expect in terms of training, marketing, and operations. Depending on the company you are working with, you might have to travel for training programs while others will come to you instead. Also, some companies only offer online support to their franchisees.

The advertising and marketing strategies will vary significantly between franchisors, and some will offer online or phone support only. At this stage, you decide how much support you’re comfortable with and whether you can survive with what’s on offer.

Step 5: Review of the Franchise Disclosure

If everything is going smoothly, then it’s time to take it to the next level. You will have a serious conversation with the representative to review the FDD and territory issues.

Review every section of the document and make sure to ask any questions. A franchise will cost you time and money, so don’t be hasty. To be on the safe side, have an accountant look through the financial statements to estimate the accuracy of projected returns. 

Another important person you should see at this stage is a franchise lawyer. As a legally binding document, you want to ensure that your rights as an individual and business person are not tampered with or diminished. In addition, a lawyer will be able to identify any unfavorable clauses that might hurt you in the long run.

Step 6: Due Diligence

At this point, you understand the industry like the back of your hand. However, restrain from making any rushed decisions. Talk to different people at a corporate level and the other franchisees. Ask about the company and whether their expectations have panned out. Ask about any regrets or wrong decisions they think they have made. If your franchisor is hesitant to share a complete list of their franchisees, then perhaps it is better to take your business elsewhere.

Step 7: Finalize Plans

If everything has gone according to plan, then congratulations! You are at the final step of the franchise process. At this stage, you have completed the evaluation, and you are ready to sign the Franchise Agreement. Ensure your finances are in order, including management service fees and cuts to the marketing and advertising funds. Do you have enough cash to sustain your franchise until you start making profits? Also, you get to meet with executives and heads of departments who will be your close associates as you start on your new franchise business.

As an entrepreneur, it is crucial to create a business plan for your franchise. Even though it is not a mandatory accessory, it is an important tool that helps to assess your business. How is the progress of your franchise in comparison to your goals? Your accountant or franchisor could help you develop one, but ensure you stay in the loop and are aware of the figures. Review your business plans regularly.

Jumpstart Your Business With Sprockets

A new franchisee using a computerAre you ready to achieve success as a new franchisee? We’re ready to help you make it happen! The Sprockets platform empowers you to hire employees that are the precise fit for your needs. It combines natural language and artificial intelligence to determine, with absolute accuracy, the right new hire for your team (in a matter of minutes!)

Contact us for more information today or schedule a brief demo to see Sprockets in action!

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The Most Common Mistakes When Opening a New Franchise Location

The Most Common Mistakes When Opening a New Franchise Location 1016 528 Sprockets

Some people have always wanted to start a business, but they fear going through the daunting process of starting from scratch with an independent company. As a result, they set their eyes on a franchise opportunity with relatively low entry costs and helpful franchisors. They carefully line up their finances and prepare to hire a team of employees.

However, running a franchise unit requires you to consider a variety of factors to ensure success. Although it is crucial to abide by your franchisor’s conditions, there are several common mistakes people make with franchises. Don’t worry, though, because we’re here to help you sidestep these pitfalls.

1. Failure to Fully Understand the Franchise Business

You probably know what people say about those who assume. Many aspiring business owners assume they know everything concerning their chosen franchise and overlook important details. They fail to inquire with their franchisor about topics such as business plans and recommended hiring tools. As a result, they limit their success.

2. Failure to Use Your Franchisor’s Resources

Franchisors often have resources that can be helpful to you if you meet the requirements of their franchise. For instance, they have detailed information about particular locations, and they understand how their business has performed in different areas to help you select the ideal spot. However, many people rely too much on their own information-gathering efforts when opening a new franchise location. This can lead to you getting incorrect data about the market you’re venturing into.

3. Failure to Negotiate Leases

The lease terms of your intended location might be complicated. Many landlords have leases that are only favorable to them. You might fail to negotiate better lease terms that can favor your business more. In many cases, people end up signing lease agreements with hidden charges or those that require you to pay rent based on revenue. This mistake eventually becomes too costly, limiting your ability to sustain the business.

A woman looking out the window as she analyzes her franchise's competitors4. Failure to Analyze Competitors

It’s crucial to do a comprehensive analysis of your competitors to have a viable business plan and be successful. Take note of other companies selling similar products and think about how you can set yourself apart (while following your franchisor’s guidelines, of course). Simply setting up a business in an area with stiff competition doesn’t automatically mean yours will fail, though. Just make sure you do the proper research ahead of time.

5. Failure to Consider Your Target Demographic

Another common mistake with franchises is that owners don’t keep their potential customers top-of-mind when planning. Setting up a business in an area where people show no interest in your products is one of the worst things that can happen to your franchise. Take the time to conduct an in-depth analysis of your target clients in the area to understand their preferences.

6. Failure to Research Local Regulations

Opening a new franchise location requires you to agree to specific local rules and regulations, including tax and federal license obligations put forth by the area’s municipality council. These laws oversee the franchise’s registration and administrations, sales and offers, and the relationship between the franchisee and the franchisor. Conduct comprehensive research on these legal requirements. Be wary of high tax burdens and other expenses associated with owning and running a business in the area.

7. Failure to Contact Nearby Franchisees

Contacting other franchisees who have similar franchises in your target area is crucial. They can give you firsthand information detailing what they have experienced. You can ask them to give an honest opinion of what they think about the location to make sure you make the correct choice and plan properly.

8. Failure to Hire the Right Employees for Your Team

Two men in an interviewLast but not least, you’ll need an effective team to make your business operate effectively. In today’s day and age, more and more franchise owners and HR professionals are looking toward technology to do the heavy lifting for them. Consider implementing Sprockets’ sophisticated solution to hiring. It’s an easy-to-use platform that utilizes artificial intelligence to determine the best applicants for your business within a matter of minutes. It’s not magic — it’s logic.

Schedule a demo today to learn more about the Sprockets solution!

A man on the computer researching employee discipline practices

The Fundamentals of Employee Discipline

The Fundamentals of Employee Discipline 1920 1080 Sprockets

Employee discipline isn’t easy for most managers. It typically involves verbal and written warnings regarding tardiness, no-shows, or disregard for the dress code or behavior that result in an employee write-up. Escalating from warnings to a write-up can be intimidating for most managers. But, it is important to follow a formal structure when moving an employee through the warning system to employee discipline to write-ups and termination. Follow these fundamentals of employee write ups to ensure you get it right.

 

#1 Take a Breath

Before taking any disciplinary action, it is important to take a step back and take a breath. It’s best not to take any actions while you are still angry at a person or situation. Write down what you experienced and who was involved. The next day, revisit what you recorded and decide if it stills needs to be acted on.

 

#2 Document the Problem

One of the most important fundamentals is documenting the problems that arise. From verbal to written warnings and write-ups, it is crucial to document and date each warning and store it in a secure space within an employee’s existing documents folder. It’s important to note when the incident occurred, who was involved, who else saw what happened (or didn’t happen), and what warning or notice was given to the offending employee.

 

#3 Cite the Employee Handbook

Another fundamental that can be easily overlooked is to actually cite the employee handbook or onboarding materials that were given to an employee when beginning their job. By citing that they have used one of three no-show warnings, the employee will need to acknowledge that their actions have consequences that they were aware of. Also cite what is outline for employee discipline, like less hours or a probationary period.

 

#4 Set Expectations

It’s not just enough to give a warning regarding no-shows, lack of proper attire, or poor customer service. It’s important to set expectations with the employee to measure progress and correct any issues that have been forming, when applicable. If a server is not routinely checking on diners or presents a poor attitude with other staff members, create a plan together to fix this and let them know how it will be monitored. For example, over the next two weeks, we expect [staff member name] to visit each customer’s table at least once every six minutes to refill water, take orders, check in on their satisfaction related to the food, and offer dessert. The shift supervisor will monitor the level of service their tables are receiving.

 

#5 Provide Proof of Warnings

After providing a verbal warning, it is important to follow it up with a written warning. These will be needed when progressing to a write up by showing that the specified number of warnings were given before a write-up was issued. From there, after the write-ups are issued, these documents are important to keep if they are used to terminate an employee, even in an at-will state.

 

#6 Follow Up

Lastly, it is important to follow up on the warnings or write-ups given to see if the employee has taken them seriously. Are they still showing up late? Providing poor service? Getting into arguments with management? If so, it’s important to follow your set guidelines regarding when to write up an employee. A bad employee is worse than no employee and can be detrimental to a restaurant’s bottom line and other staff members.

Overall, it’s important to follow a routine system when moving an employee from warning to write-ups to termination and stick to the fundamentals along the way to avoid legal trouble. It’s important to keep track of which employees aren’t adhering to their job requirements and are costing the restaurant lost customers, poor productivity, and even lower staff morale. 

Before making your next hire, learn how Sprockets’ Applicant Matching System ensures you only hire candidates who are like your best employees.

What to Know About Stimulus Funding for Your Franchise

What to Know About Stimulus Funding for Your Franchise Sprockets

During uncertain times, it’s truly heartening to see the federal government step in to help small business owners. It can be difficult to navigate a new stimulus program, especially when you need to stay focused on operations, so we wanted to help provide a simple breakdown for our clients.

 

What’s happening now?

Last week the federal government approved a $2 trillion stimulus package that in part gives aid to small businesses impacted by the COVID-19 pandemic.

 

How does the stimulus package help my Home Health franchise?

On Friday any small business with less than 500 employees can apply for the Paycheck Protection Program. The program allows for small businesses like Home Healthcare providers to obtain a loan equal to 2.5 times their people costs, which include payroll, benefits and taxes. If you keep all those employees for 90 days (through June 30th) the US Government will forgive 100% of the loan. The intent is to help businesses, like yours, weather the COVID-19 storm and keep you people so that you will be best positioned for the recovery.

 

What should I be doing right now?

Only a small number of banks will be approved to issue these loans, so check with your local lender and be careful for scams. Jonathan Morris, President and CEO of Titan Bank, an SBA Preferred Lending Partner based in Texas recommends that, “It is important that you apply early on. There are 30 million small businesses in the U.S. and $350 billion allocated to the program. We expect funds may run out before everyone can receive a loan.. I’d suggest only applying to FDIC-insured bank for PPP loans. Many non-banks are taking applications, but in almost all cases they are simply trying to broker this information to banks in return for a fee.”

 

What are some strategies and caveats I should think through?

  1. Laying off employees: Many industries have reacted by laying off employees. The Paycheck Protection Program was specifically designed to encourage businesses not to use this strategy. Also, consider the obstacles around health insurance when laying off or furloughing employees. Speak to your broker to understand if your current health insurance plan allows for temporary furlough.
  2. Loan forgiveness: Make sure you meet the requirements to have your loan forgiven. If you reduce the number of staff members or payroll costs are reduced by 25% or more after the loan origination, you’ll likely get a reduced dollar amount back during loan forgiveness.
  3. Payback period: If the full amount of the loan is not forgiven, the unforgiven portion will need to be paid back in two years. This comes with a six-month deferred payment window.
  4. SBA Economic Injury Disaster Loans: This may be a better option for your business if you don’t carry a lot of payroll or need funds in excess of what you’re eligible for under the Paycheck Protection Program. The downside to an EIDL loan is that you will not be eligible for any loan forgiveness.

 

When will I get funds from the loan?

Previously, getting a loan through the SBA was cumbersome and took a lot of time. That will not be true for this stimulus package. Lenders are already expanding their staff in order to handle the millions of claims that are expected to come through. In addition, they are reducing the normal amount of paperwork required. The prevailing thought is that checks will start rolling out by the end of next week. (April 10th)

 

Links to other helpful resources

Someone holding 100-dollar bills

Why You Should Care About An Employee’s Financial Wellbeing

Why You Should Care About An Employee’s Financial Wellbeing 1558 754 Sprockets

Organizations have only recently understood that employee wellbeing is an aspect that affects both employees and employers. Financial wellness, in particular, goes hand in hand with emotional health and too many employees in America are worried about money. With millennials making up the largest generation in the U.S. labor force, 65% of them are worried about their finances. It’s no wonder then that many are looking for employers who offer student loan repayment assistance as 44.7 million Americans owe a total of over $1.56 trillion in student loan debts. And with 56% of workers with loans and other debts indicating that they worry about repaying their loans either ‘often’ or ‘all the time’ it’s affecting their work and costing their employers.

With roughly one in two employees worried about their finances, many suffer from depression, panic attacks, and lack of sleep, which can lead to chronic physical ailments. Clinical psychologist Carla Marie Manly explained that the burden of debt has been shown to take a major toll on mental and physical health. She noted how chronic stress can lead to long-lasting harm like greater rates of heart disease, diabetes, and chronic sleeplessness due to elevated levels of stress hormones like adrenaline and cortisol.

This is because when we’re stressed the body’s fight-or-flight response, which developed as a survival mechanism to allow our ancestors to react quickly when faced with immediate danger, kicks in flooding the body with stress hormones. The Link Between Physical and Financial Health’ by Marcus quoted financial coach Elisabeth Donati, who said that money is “tied to our basic, hardwired drive to survive.” In fact, as Donati explains, “Financial stress seems to trump almost every other kind of stress except health stress.”

In turn, it also ends up costing millions in productivity for their employer. A survey by Salary Finance indicated that American businesses are losing $500 billion every year due to employee financial stress. Lost productivity is costing employers 11% to 14% of their payroll expense, or $2,000 per employee every year. On a national level, lost productivity due to financial worries comprises 2.5% of the U.S. GDP and it’s a problem that gets worse every year. Mental wellness quickly deteriorates if financial solutions aren’t made available.

Now more than ever employers understand that by investing in the general and financial wellbeing of their employees they can net a substantial ROI. While most employers focus on aspects like flexible work hours, remote work, good work-life balance and employer-matched 401(k), for example, to keep employees happy and help reduce their stress, there is a growing need to help employees with financial wellbeing. It starts with financial literacy education in the workplace. Nearly two-thirds of Americans could not pass a basic financial literacy quiz, so teaching them how to budget and save is a step in the right direction to prevent employees from getting into crippling debt in the first place.

Second, an employee assistance program that helps connect employees with financial and mental health services they need has minimal yearly costs to the employer. Other options include setting up a rainy-day fund by partnering with zero interest loan providers that can help your employees in times of need. Although these initiatives have costs involved, over time they can pay dividends in employee retention, engagement and increased productivity.

 

Post made only for the use of sprockets.ai

By Lana Deron