It’s never too early to start building a positive reputation for your franchise. The private equity (PE) market is looking for two things from you:
- A well-documented system
- Strong unit economics
However, before any investor is going to take a look at your system and books, you need to take stock of your franchise’s reputation. Is it a positive one? Does it need some polishing?
Having a favorable reputation among your customers is critical to your success. But they’re not the only people with whom you need to put your best foot forward. Franchisees matter too and there’s a high likelihood that any potential investor will measure their satisfaction.
How would your franchisees answer if asked, ‘Based on your experience, would you sign a contract again?’
Reputations take time to build — and if less than positive — they take valuable time to correct. If rule number one of securing PE funding is running your business like it’s for sale from day one, taking care to establish a reputable and respected business should be rule number two.
How to build a positive reputation for your franchise
PE firms will conduct their own due diligence about your business. Make sure what they find is positive. Here’s how to build a positive reputation for your franchise:
- Be transparent. Always provide as much information as you can about your business and the products and services you offer. For example, if you need to increase prices, let your customers and employees know why. Do you source your products locally? Say so. Transparency can go a long way in building loyalty and credibility.
- Provide a quality experience. Deliver a consistent and quality experience across all your units. Not only will customers notice, but they’ll tell others. Word-of-mouth isn’t just free, it’s effective and drives five times more sales than paid aids.
- Treat your employees fairly and with respect. It’s a simple win-win: Be kind and considerate to your employees and they will be happier at work. Their satisfaction will not only translate to better customer service but any conversations they may have outside the workplace (including on social media) about your franchise and business practices will remain equally positive
- Don’t ignore reviews. Whether positive or negative, always respond to reviews and thank the commenter for taking the time to provide feedback. If you don’t have time to do this yourself, appoint a trustworthy person on your staff to address any and all comments — and make sure they keep you informed along the way.
- Treat your entire ecosystem well. This includes franchisees, vendors, suppliers, your leadership team and employees. Financial disclosure documents are important but so is how you treat the people in your value chain.
PE investors are showing interest in franchises earlier and earlier. It pays to make sure potential investors have no reason to discount you when you pop up on their watch list.
5 Tips to Accelerate FranchiseSuccess
Solutions for common franchise challenges.