Skills gap: the differences between business ownership and franchising

When getting ready for franchising there are plenty of things that a budding franchisor has to consider. How replicable is their business model? Have they thoroughly checked the financials? Is the franchise agreement watertight? But one thing that is often overlooked is how the skills required by franchising differ from those needed to start and run a business.

Priming the pump

One of the first skills involved in franchising is knowing the right time to enter the sector. “We originally looked at franchising in the early 2000s and, at that time, it just wasn’t right for us at all,” says Martin Wood, managing director of Prima Ardelle, the recruitment franchise. However, after 2008, this all changed; contrary to what one might expect, the company thrived in the post-recession climate and remained very profitable. This convinced the founders that the model was robust enough to begin franchising. “We knew we could replicate the way that we operate,” Wood says.

Having already enjoyed a lengthy heritage with a non-franchised enterprise before getting involved in the franchising sector, Wood is certainly in a position to appreciate the different skills required by the two models. “When growing a traditional business, you need to know your product or service inside out,” Wood says. “And it has to perform a function within the marketplace; you have to be able to sell it.” Essentially, startups need to concentrate on providing something that occupies a unique space and stands out from the crowd. This product-focused approach naturally favours more complicated concepts and allows increasing levels of sophistication to be added to a product or service as time goes on.

Conversely, franchising requires an ability to reduce a business model to its most fundamental, streamlined form. “You need to remove any grit from the gearbox,” says Wood. “It needs to be really fluid.” Given that a franchise network will inevitably be composed of people with all kinds of backgrounds and experience levels, a knack for reducing a complicated concept to its most basic elements can prove invaluable. “If you can’t replicate it for a broad spectrum of people, you’re just not going to be able to do it,” Wood continues.

Adapting from one approach to the other won’t always be the easiest of transitions but it’s worth remembering that you don’t have to do it alone. “You need to outsource your non-core competencies,” says Wood. “That’s really important.” Seeking help in key areas that you are less experienced in will not only help shore up any skills gaps that you might have, it will also help you smooth out the rougher edges in your model. However, Wood warns against assuming external consultants will do everything on your behalf. “Nobody really knows your business as well as you do,” he says. “The only person that can make it happen is yourself.”

Balancing act

For Sarah Owen, developing both her professional skills and her business has been a very organic process. She first came up with the idea for Pyjama Drama, the kids’ drama-class franchise, when doing performance activities and making up games and songs with her children. “I just thought: ‘I wonder if I could do a class like this?'” says Owen. Before long she had set up classes at the local leisure centre and at several nurseries, giving up her job as a high-school drama teacher to run the business full-time. Four years later, when her youngest child started school, she resolved to start ramping up the business. “I decided to give it a go and see what happens,” Owen says. “So I sold the first franchise to one of the mums who’d come to my classes.”

Building a company for the first time, whether it be a startup or a franchise, involves picking up a whole host of skills. And this is something that Owen knows all too well. “For me personally, it was a massive learning curve,” she says. “I had no experience in business before and certainly had no experience in franchising.” However, she quickly found that the most important skills for running a business were those that help you innovate and identify new opportunities or keep things together in difficult circumstances. “You have to be incredibly tenacious, able to think outside the box and willing to accept risk,” says Owen.

She maintains that there is a definite overlap between the skills required for traditional business and those needed for franchising. “They rely on very similar skills,” Owen says. But whilst she believes that typical entrepreneurial traits like tenacity and drive are just as important in franchising as they are elsewhere in business, she warns against being too autocratic when building your franchise. “You’ve got to have the self-belief to make your own decisions but try not to be arrogant,” she says. “Be willing to listen and take other people’s experiences on board.”

This is one of the real strengths of a franchise: you have a network of partners that can provide valuable input when you need a second opinion. “In our franchise, if we have to make certain decisions, we will very often give our franchisees a vote,” says Owen. “That can be a massive source of support because you’re not just relying on your own opinion.”

Outside of the industry-specific skills an entrepreneur might require, Oyston believes there is a universal skills palette that will always assist in building a thriving business. “Discipline is key, as are drive, tenacity and organisation,” he says. “Then you need the creative element to be able to create and put the right processes in place.””

While these skills help lay the foundation for a business, marketing expertise and an eye for providing a quality service, product or experience prove invaluable in growing a company’s profile. “The thing that grows your business is providing customers such a great experience that they return with their friends,” he says.

Certainly these skills set Oyston and his business in good stead; by 2011, Regional Sports Schools was operating in Cardiff, Oxford, Swindon and London, setting the stage for its acquisition by Sports Xtra. “It’s founder Gareth [Lippiatt] had spoken to us about franchising and it was just a very good fit,” says Oyston. Part of this was down to the fact that both companies were exploring ways to encourage the involvement of kids who otherwise might not participate in sports, offering activities such as spy, detective and adventurer activities. “It was just in line with the direction of our business,” Oyston explains “That’s when we became shareholders and I became managing director of Sports Xtra.”

Finding himself in a senior position at the head of a major UK franchise meant that Oyston quickly had to adapt his skill set. “I’ve learnt more getting involved in franchising than I did in all of the years that I was running my own business,” he says. However, he found that the main difference was in degree, rather than kind: the most important skills, such as consistency and an ability to manage the needs of stakeholders, are cross-transferable. “They’re skills that you would need in a business anyway but you just need to have a real focus on those as a franchisor,” he says. “Much more than you would in a standalone business.””