We all know that in business, standing still really means going backwards and so most savvy entrepreneurs have the ambition of growing their operation. Key to fulfilling this ambition successfully is having a clear goal, vision and plan. Plus, a disciplined approach to monitoring progress so steps are taken to adapt and overcome those unexpected hurdles – there will usually be one or two!
From a franchising perspective, the owners of businesses that elect to expand by franchising generally understand the principles, particularly that a trading history of proven success is a fundamental requirement. If that track record is clear and verified, the initial discussions I have with business owners will then typically focus on three crucial issues. Firstly, how ready the business currently is to franchise. Secondly, the motives of the owner, and/or management team, for deciding that franchising is the route they would prefer to take. Lastly, and very importantly, the implications of franchising to the business and how it functions. There must be clarity about each of these points because they will influence how effectively a business is able to transition to operate as a franchise.
I work with business owners to help them envisage early on what growth and change will look like and therefore, what it really means to franchise. We consider what it means to the current business and what will make it work for franchisees. Will franchising compliment the operation or undermine it, particularly the customer interface? There is little point in embarking on a growth journey through franchising unless there is a clear vision and the resources in place to execute a successful plan.
The demands of franchising must be clear and accepted. Most franchised businesses are SMEs with a founder/owner that is actively involved in managing the day-to-day activities. Rarely can they simply disconnect themselves from that key role to focus entirely on the franchise development plan. So, even with the support of an existing team, owners usually find that building a franchise network adds considerably to an already heavy workload.
This realisation can sometimes harness a business owner’s enthusiasm to franchise and possibly reveal a flaw in the motives for doing so. I recall a discussion with the owner of home improvement business which I considered to be very franchisable. He was in his late fifties and the conditions necessary for franchising the business were all in place, except that it became clear during my preliminary feasibility assessment that what he really wanted was to become semi-retired and thought because franchisees would drive the business, franchising would allow him to take a ‘back seat’. That challenge could have been addressed by appointing an experienced Franchise Manager right at the outset but with that option dismissed as unaffordable, the plan to franchise inevitably never got off the ground.
The key point is for owners to appreciate they will have to build their network of franchisees while keeping a firm grip on the existing business. And, that although franchisees will certainly drive the business’ growth and reputation, they will only do this if the franchisor devotes time and effort to mentoring, nurturing and supporting. Franchisees can be very demanding, particularly during the early stages – they will expect the business owner and his/her team to be available to guide and advise on applying the right methodologies and helping them make the best decisions. After all, access to know-how is precisely why people invest in a franchise.
A new franchisor is taking a huge leap of faith by placing their precious brand and knowledge assets in the hands of franchisees. While franchisors are entrepreneurs, franchisees are usually not; they are likely to be entrepreneurial and ambitious but need the direction, reassurance and support that a franchise provides. Through the training and support provided to franchisees, the aim should be to create a group of brand ambassadors all using the same prescriptive methodologies, yet they must also be trusted with the freedom to run their own operations – staffing, marketing, financial control, service delivery. That can sometimes be an uncomfortable reality for new franchisors.
So, the culture of franchising is different to traditional directly operated businesses. Good franchisors create a culture that recognises franchisees as ‘partners’ and seeks to build a ‘community’. Mentoring, training and communication need to become the focus of management.
Listening to franchisees is also key. Franchisors should not worry if franchisees challenge their thinking. They want to be heard and feet on the ground in a new territory may give rise to new ideas which can work for the whole network. But, a franchisor must also hold franchisees to account – preserving the integrity of the brand is wholly dependent on this. The systems of the business must be designed to support franchisees by maximising efficiency while also being sufficiently intrusive to provide the franchisor with the data necessary to accurately measure compliance and performance.
Such a culture shift can be a difficult one to negotiate. On the one hand the environment must be collaborative and supportive, on the other it is prescriptive and demands accountability. It can take time to adjust and develop an approach that all members of the team are able to adopt, which is why we often work with our clients to build an understanding of good franchise management practice. In my experience, achieving a productive and balanced relationship with franchisees is dependent on open engagement and mutual respect. If this is the foundation of a franchisors business its franchisees are much more likely to align correctly with its values, goals and strategy. Get the culture right to when executing a franchise development plan, and part of the battle is won.
