Build Your Franchise's Reputation Now To Get The Best PE Buyout Later

Savvy private equity (PE) investors are looking for two things from your franchise: strong unit economics and a well-documented system.

But here’s the thing: before any investor looks at your system and books, you also need to start with the basics: assessing your franchise’s reputation.

Having a positive sentiment with customers is critical. 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 look into how satisfied they are doing business with you.

Think of it this way: if an investor asked any of your franchisees, ‘Based on your experience, would you sign a contract again? — what would they say? If you aren’t sure, you have work to do. Reputations take time to build — and if less than favorable — they can take considerable time to correct.

If rule number one of securing PE funding is running your business like it’s for sale from day one, establishing a reputable and respected business should be rule number two. 

Five ways to build a stellar reputation for your franchise

PE firms will conduct their own due diligence about your franchise. Here’s how to build a positive reputation:

1. 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. Transparency can go a long way in building loyalty and credibility.

2. Provide a first-rate experience. Deliver a consistent and quality experience across all your units. Not only will customers notice, but they’ll tell others. 

Fun fact: word-of-mouth is free, effective and drives five times more sales than paid aids. 

3. Treat your employees as you’d want to be treated. It’s a simple win-win: Be kind and considerate to your employees and they will be more productive and positive at work. Kindness is contagious. 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 also be positive.

4. Monitor (and respond to) reviews. The golden rule here is, whether positive or negative, always respond to reviews and thank the commenter for taking the time to provide feedback. If you don’t have the bandwidth to respond yourself, appoint trustworthy staff to address all comments. Ask them to provide you with ongoing reports regarding customer feedback. Doing so will make sure you stay informed and when necessary, let you know when a response from you is merited.

5. Value your entire value chain. From franchisees, vendors, and suppliers — to your leadership team and employees — how you act matters. While financial disclosure documents are important, so is how you treat all the people you do business with. 

It’s no secret that PE investors are showing interest in franchises earlier these days. So it pays — literally and figuratively — to make sure you have a five-star reputation. Be sure to account for accurate financials, appropriate reporting systems and stellar customer service to make a great impression. Thryv can help.

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