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Five Ways Franchisees Can Increase Their Profitability

Demonstrating your value to a community by discussing industry-specific topics provides potential customers a sense of security when they seek out your business or products.

By Roger Murphy

Despite the shelves of how-to books released each year and the business coaches lining up to offer support, the overall success of a company is contingent on countless factors — some mutually exclusive, others closely intertwined. As such, two franchises with the exact same product or service could have very different fates, depending on the execution of their business model.

To ensure today’s franchise owners have a fighting chance at achieving success and profits, operators should consider these five proven steps.

1. Diversify the Brain Trust.

When a small-and medium-sized business’ entire operations are the responsibility of an individual owner or manager, the company operates at a constant risk of peril, even if everything is running smoothly. Consider this: if the franchisee retires, fell ill or resigns tomorrow, would the staff have the knowledge, access and aptitude to keep running the business as usual? If not, you may have an unnecessary risk on your hands.

Valuable companies are those that have demonstrated resilience and have a small collection of leaders to carry on the company’s legacy no matter what it faces. If only one person in the business handles customer and vendor contacts, understands the company’s growth strategy or just has the keys to the front door, an unfortunate series of events can cause everything to topple.

A franchise business’ lasting and most successful employees can be groomed to ensure its seamlessly operations. Not only will this fill the employees with a sense of accountability and trust, but the business owner can have the peace of mind that his legacy might outlast the risk of unforeseen obstacles, and the overall business will become a more valuable entity.

2. Cut Operation Costs.

Everyone knows earnings minus costs equal profits, but inexperienced and seasoned entrepreneurs alike might overlook some obvious ways to push certain factors in their favor. If you’re in manufacturing, simply swapping vendors or changing production materials could cut operational costs. For the rest of us, solutions might not be quite so apparent. Some options that business owners could consider include:

  • Reducing the amount of owner perks paid for by the company.
  • Sell or remove unnecessary assets that go unused or reduce efficiency.
  • Normalize inventory levels to reflect typical operation conditions and reduce wait time for inventory refills. Time spent waiting for inventory to restock leads to costly missed opportunities.

3. Hone in on Loyal Customers and Clients. 

Chances are, you already have a positive relationship with your loyal customers, and you can tap into that to understand the diversity of their needs. As you introduce new products or services, your franchise can become more profitable and valuable. Franchisors should recognize the value of limited time offers and seasonal services, and get customers hooked on them. Eventually, it becomes the business owner’s responsibility to upsell customers and introduce clients to everything the business offers. Perhaps in some cases, your loyal clients simply aren’t aware of all the products and services they have access to. At some point, timely upselling can be just what a business needs to boost its profitability from existing revenue streams.

4. Celebrate Your Uniqueness. 

Anything that a business offers or exemplifies that other companies can’t or would struggle to replicate immediately makes the outlying business more valuable. A company’s uniqueness might stem from the niche service it provides or the niche audience it serves. Uniqueness might come from patents that a business owns or even the capital investment necessary to get it off the ground. Whatever makes your franchise business special, allocate resources to make sure that quality continues to exist and flourish.

Ideally, franchise owners should want a brand that is difficult to replicate, either because of the products and services it offers, or other qualities that lend to its one-of-a-kind identity. Uniqueness is pivotal in earning and retaining substantial market share, essentially giving potential clients and customers nowhere to go but your business. Having a significant market share allows the business owner some control over the market value of a product since relatively few, if any, competitors are vying for the same clientele. This isn’t supposed to be a green light to exploit existing and potential customers, but rather an effective litmus test in measuring and demonstrating the value of a business.

5. Share Your Expertise.

Whether business owners choose to use a PR team or just actively promote themselves, demonstrating market or industry expertise to others can be an effective way to increase value and profitability. Two identical businesses with the same product, business model, even price point, could vary greatly in their levels of success depending on the reputation of their ownership or management.

Entrepreneurs who participate in speaking engagements, offer sound bites to media outlets, perform guest lectures at schools or events or just have a popular social media presence are inadvertently lending the reputation and perceived value of their company.

Some entrepreneurs might hesitate to reveal trade secrets that could potentially jeopardize the uniqueness of a company, even when the benefits of a consistent public output are outlined. In situations like this, carefully crafting brand messaging or employing a publicist to lead the strategic public output can be an accessible solution. Alternatively, most entrepreneurial thought leaders aren’t revealing what makes their business tick. Rather, the reputation and nature of these thought leaders’ businesses are what get journalists, investors and peers to listen in the first place. Demonstrating your value to a community by discussing industry-specific topics hardly ever leads to copycat saboteurs. Instead, it provides potential customers a sense of security when they seek out your business or products.

Roger Murphy is the founder and CEO of Murphy Business & Financial Corp., a North American business brokerage firm with more than 150 franchises and agents across the United States and Canada. Find him at 

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