The definition of business format franchising is about having a “successful and proven” business. The Code of Ethics of the British Franchise Association requires franchisors to have operated the business in at least one pilot unit for a minimum of twelve months before starting to grant franchise rights to others.
Pilot franchisees, or pilots for short, help franchisors-to-be to prove that the business is not founder-dependent and is transferrable, i.e. that the business can be successfully operated by someone other than the founder. It also helps to stress test systems that the franchisor has in place or intends to use, highlight any gaps in any documentation or processes as well as testing the business in different locations. Identifying gaps or anything that doesn’t work is just as important as proving what does work.
If you are a budding franchisor, consider the following:
Transparency
You will need to be transparent with any potential pilot that they will be your guinea pig, that you may not have the answers to all the questions, that this will be a learning curve for you as well as for them. It is better to under-promise and over-deliver!
Feedback
As a franchisor, you will need to be open-minded to feedback – remember, what is obvious to you may not be obvious to your pilot and that comments are not criticism of you or your business but are given with the intention of improving your processes ready for roll-out! As hard as this is, try to take the emotion out of this – remember why you have a pilot – to test!
Independence
Whilst on the one hand, you will need to let the pilot franchisee operate independently on “arm’s length” basis, regular touchpoints and monitoring will be essential. You will need to provide the pilot with guidance and support but you are not there to run the business for them. Also, a pilot is not your employee so do be mindful of that!
Risk
Anyone who is willing to be a pilot is taking a risk on you as much as you are taking a risk on them – they are invested and want you to succeed because they want to succeed also!
Future
Consider both scenarios – what if this works and what if it doesn’t. Be clear on what the exit from the relationship would look like and the expectations once the relationship has ended. It is much easier to agree these things at the outset than to navigate them when they happen.
If you are considering becoming a pilot, you may need to accept that the systems and processes may not yet be perfect and that the franchisor is also on a journey. Mirroring the above, it is worth remembering that:
Benefit & risk
Although you may be the “guinea pig” and your journey, as a pioneer, may be more difficult than that of franchisees of the future, you will be receiving other benefits such as more support and training or a reduced fee. Whilst you are taking a risk in investing in a business that is in the early stages of its franchising journey, the franchisor is also taking a risk in sharing confidential information and trade secrets and allowing you to trade under the franchisor’s brand! It is the franchisor’s name that is on the line after all.
Don’t reinvent the wheel!
Although the franchisor will seek your feedback, do follow the franchisor’s processes and systems. Don’t try to reinvent the wheel – remember, the franchisor has a business that works, the franchisor now needs you to prove that it can work in a different location and/or operated by someone other than the founder.
Advice
When you found something that you are passionate about it is very tempting to just get stuck in but it is vital that you understand exactly what you are signing up to and the contractual obligations to which you are committing yourself. As a pilot franchisee, it is even more important to get legal advice from an appropriately qualified solicitor experienced in franchising.
Every one of us has to start somewhere and piloting is an essential element of ethical franchising. Franchisor – franchisee is a special relationship built on mutual benefit – neither can be successful without the other and it is never more so than in a case of a new franchisor and a pilot franchisee.
