Purchasing a franchise is one of the many ways to build wealth slowly. To turn your franchise purchase into a steady income stream, you need
1) a thorough knowledge of the rules of your franchise and a willingness to follow them.
2) a properly trained team of employees, and
3) qualified managers.
For example, let’s say you’re interested in purchasing a sandwich shop franchise. Your manager will need to run the day to day financials, manage employees, and communicate with you on a regular basis.
The challenges your manager will face include
1) Turnover. If you invest in an industry such as food service that has a high turnover, your manager will spend a great deal of their time training new employees. You need a manager with great teaching and mentoring skills, and you’ll need to support them while they put their time into training and mentoring. Thus, it’s critical that you understand your business numbers intimately before asking your manager to take the reins.
2) Hours. To truly understand the work it takes to run a franchise, you may need to find a restaurant owner to shadow and learn from. If, at the end of this employment stretch, you’re still interested in the restaurant business, consider finding your own shadow as a manager to keep your shop profitable as you consider adding another.
Another option to building a quality management team is to build your managers from your employee pool. This requires you to be on-site and observing your employees carefully to confirm they have the characteristics it takes to be a good manager.
Again, let’s return to our sandwich shop. Your manager needs to be
1) Quick. Fast food isn’t a dining destination; it’s convenient. From the first step inside the door, your customers need to know their food is on its way to them.
2) Flexible. It’s said that managing well can mean serving well, and when dealing with fast food workers, many of whom are working their first job and may have limited schedules or transportation access, keeping shifts covered can be a challenge. Flexibility is a skill that can be under-appreciated by some owners. Don’t be that owner!
3) Thrifty. Profit margins are narrow in many franchises; hiring carefully and purchasing at proper scale will add to profits. A manager with a desire to own a franchise may be a great addition to your staffing pool, and they can develop an eye for careful spending from watching you work.
No matter which franchise you’re considering buying into, you’re going to need some help and you may need to build new skills. If you have the professional flexibility to put in some work shadowing another franchise owner, do so. Learn the business well enough to teach it to someone else, and share your skills as you build new ones.