Wouldn’t it be amazing to buy a business – hand over the cash, put in a manager and then do nothing except count your profit? Yes, indeed. It is, however, a totally unrealistic approach to any business.
And yet, when people look at management franchises, they often ask if they can continue to work full time in their own, already successful, jobs or businesses. Can they take a truly ‘hands off’ approach?
To explore this a little further, I’d like to share with you the concepts of a management franchise vs owner operator.
A business that declares itself an ‘owner operator’ will expect the franchisee to work in the business, managing the process and staff, but full time, hands on engaged with the day to day running of the business.
A management franchise is not the polar opposite. As a franchisor, when a franchise is granted to a franchisee, it is on the basis that they will operate it and give full effort to making it a success. There will be an expectation that the franchisee, whilst maybe not working at the coal face, takes an active part in the growth and management of the business.
A management franchisee will typically work in the business to get a full understanding of what it is, how it works and who best might be managing it. This might involve six to twelve months of ‘in the business’ with a staged step back to working solely ‘on the business’. What’s important is to understand – listen and hear – what the franchisor is looking for. They have worked out what is best for success – and that’s the model you’re buying into.
Exploring a little further, a management franchisee should learn how the business operates at every level. It’s a commonly known fact that a McDonald’s franchisee will spend considerable time in a restaurant covering all jobs before progressing to running and/or owning a restaurant. So it is in most management franchises – you need to work in the business.
Cynically, you’ll understand where the bodies are buried! You will know the bits of the business that are more challenging and that helps you to recruit, train and develop people to work in the business. Knowing where the short cuts can be taken, and stopping them because you know how and why, can keep the business healthy. Clearly understanding the reasons for process, the methods and the levels of engagement needed, help in putting the right team in for the future.
Some management franchisees find they enjoy it and stay in the business. Sometimes that is worthwhile and will drive the business to success – but doesn’t necessarily encourage growth into further units. Stepping away from day to day gives a Franchisee time to develop employees, managers and a growth strategy, but armed with an understanding of what the day to day really brings.
There are many multi-unit franchise operators (more than one franchise territory and often across more than one brand) who will work first IN the business, then step back and put management into the business. And then move to another model, whilst still retaining a close eye on the operations.
What’s important is to understand what the business demands, what the Franchisor recommends, and follow the model to success. Not working in the business is just an investor…not to be ignored as a route to business ownership, but not what most franchisors are really looking for.
