Allowing employees to buy into a franchise as a franchisee can have huge benefits for all involved
Finding the best franchisees for your franchise can involve an awful lot of legwork, from running ad campaigns to attending trade shows and events. And, even after you have found the right candidate, there is still a good deal of work to be done training up and familiarising newcomers with your model. Fortunately, for a franchise there is a source of franchisees that often goes untapped: its employees.
Whether someone is an employee or a newcomer to the brand, the motivations for buying a franchise are often the same. “They want the freedom of running their own business without having to go it alone,” says Chris Clarke, national franchise manager of Ringtons, the tea and coffee franchise. However, there are a couple of key differences that might make an employee more confident about putting their money on the line. “The employee has already had the opportunity to look at the business from an insider’s perspective,” he continues. “They know what they are dealing with.”
But it’s not just familiarity with the workings of a company that can encourage employees to become franchisees: they’ve also seen first hand the rewards that other franchisees have secured by buying into the company. “It comes about naturally because they see the benefits that it can bring,” explains Brian Whitford, head of marketing at Bartercard, the bartering business marketplace.
Taking on employees as franchisees can offer franchises the best of both worlds. Compared to your average franchisee, a former employee will take far less time to bring up to speed as they will have already learnt a lot of the business’s fundamentals. “They know the product, service and people before they start,” says Phil Harrison, national franchise manager of EnviroVent, the sustainable ventilation supplier. “They also know the company’s core values and mission, so there is a trust that is already present that has been built up over many years.”
Whilst there is still a huge amount to learn for anyone taking on their first franchise, having spent so much time steeped in the company’s culture, brand values and practices means employees are already one step ahead of other franchisees. “It makes a huge difference if they’ve already got the knowledge of how the business works,” explains Whitford.
On the flip-side, as a stakeholder, any franchisee is likely to be more committed to the business than the average employee. Given the fact that they’ve had to make a sizeable investment up front and that any returns they make will be based on their own efforts, it’s safe to assume that moving from employee to franchisee will boost an individual’s engagement. “Employees who become franchise owners are committed enough and believe in the business model enough to invest money into it,” comments Clarke. “Once the business is in their own hands, making the business a success is as beneficial to them as it is to us.”
That’s not to say there aren’t difficulties involved. “There are plenty of challenges when going from an employee to a self-employed person,” Whitford comments. But whilst learning how to handle payroll or VAT is always going to take a reasonable amount of effort on the part of a new business owner, an employee-turned-franchisee still has less to take on than someone coming in afresh. “When you’ve been employed by the company that you’re going to buy the franchise from, it actually dramatically reduces the challenges you’ve got because you know the business, you know the people, you get support much easier,” he says.
However, despite the learning curve involved, taking on employees as franchisees can have huge benefits for a business. Before a franchise agreement has even been signed, the franchisor has plenty of evidence how well the potential franchisee can follow the business’s best practice. “As a franchisor you know exactly what you’re getting so there are no nasty surprises,” explains Harrison.
This means that entrusting them with the franchise’s brand is a surefire bet. “With an existing employee, we already know that we can trust them to make the business a success,” Clarke says. And, given their familiarity with the business, this is far from a one-way street, with employee-cum-franchisees also benefitting hugely from the relationship. “It’s a win-win for both parties,” he concludes.
I had never considered running my own business because I never thought I had it in me. Chris (Clarke) told me I would be able to double my wages by taking the franchise [...] He was certainly proven right.
I launched the pilot franchise and didn’t receive any additional training as I already knew the business model quite well from being an employee. As a franchisee, you have to look after the books, cash up and log it so there is a lot more involved than when you are just a driver for the company; you’re put in charge of your own destiny.
By putting the hours in and not cutting corners, you get results [...] The team at Ringtons are honest and upfront and always there when you need them so I feel fully supported. Having your own stake in the business is rewarding if you are prepared to put in the hard work.
The prospect of becoming an EnviroVent franchisee was something that I had already been thinking about for a while [...] As a director of EnviroVent, taking the step to run my own company, doing something I was passionate about and enjoyed, was a natural progression for me.
The transition was relatively easy, as I was already familiar with EnviroVent and its products. Yes, being an employee smoothed the way, as I already knew how the business operated; however, what I would say is that every franchisee (new or old) receives training and full support from a designated in-house team.
It has made me become more focused and aware of potential opportunities on a daily basis. I’m really pleased that I took the step, in fact I don’t think I’ll ever look back. My business is thriving and I’m really enjoying it.