The short answer
Four lessons from David Busker’s years as a franchise owner: define the skills your general manager needs before you hire, choose a location with a high density of your target customers, invest in simple tools that save management time, and keep more working capital than the minimum estimate.
This is a recap of my column on Entrepreneur. Read the full column on Entrepreneur.
Key takeaways
- In location-based businesses, a general manager’s most important skill is usually sales and marketing.
- In service businesses, technology now handles much of the marketing, so delivery and team management matter most.
- The more often customers visit, the closer the business needs to be to where they live.
- Most young franchises that struggle are undercapitalized, not bad businesses.
1. Define the general manager role first
In a boutique fitness franchise, passionate instructors did not automatically make strong salespeople. Defining the ideal manager as someone who lives and breathes sales, with a passion for the product, made hiring far more effective. Service brands are different: their software handles more of the marketing, so the manager’s job centers on delivering the work and leading the team.
2. Prioritize customer density
A busy area is not enough. You need many of your target customers within a short drive, often about 10 minutes for businesses people visit often. Use the franchisor’s demographic data, but add local real estate expertise and your own judgment. How franchise territories work.
3. Invest in tools that save management time
A simple scheduling tool with cross-trained roles let staff trade shifts on their own, which saved hours of manager time each week.
4. Keep extra working capital
Item 7 of the Franchise Disclosure Document estimates your initial investment, including “additional funds” for the first months of operation. Few new businesses are cash-positive that quickly, so plan for a cushion beyond the estimate and review it with your own accountant or advisor. How to finance a franchise.
Frequently asked questions
How much working capital should I have for a franchise?
Start with Item 7 of the Franchise Disclosure Document, which estimates additional funds for the first months of operation, then add a cushion. Ask current franchisees how long it took them to break even, and review the numbers with your own accountant.
What should a franchise general manager be good at?
It depends on the model. In location-based businesses, sales and marketing usually matter most. In service businesses, delivering the work and managing the team usually matter most.
Read the full column on Entrepreneur · More franchise guides
David Busker is the Founder of FranchiseVision and a senior consultant with FranChoice, the premier national network of franchise consultants. David helps candidates exploring franchise ownership to set their criteria and matches them with the perfect franchise, then supports and guides them through due diligence and franchise signing. You can learn more about David at FranchiseVision.
