WHICH FRANCHISE IS FOR YOU?

from Inside Franchise Business Feb/April 2020

FINAL WORD

WHAT’S THE BEST FRANCHISE TO BUY?

Find the perfect franchise that will set you up for a successful future.

An estimated 1100 brands operate in the Australian franchise sector. That’s a hefty number to choose from when you’re considering how best to invest your time, money and energy. So where do you start?

Well, that’s what Inside Franchise Business asked two industry experts to consider.

WHO’S WHO? Jason Gehrke is the director of the Franchise Advisory Centre and has been involved in franchising for more than 20 years at franchisee, franchisor and advisor level. He advises both potential and existing franchisors and franchisees, and conducts franchise education programs throughout Australia.

There is no one-size-fits-all franchise that is best for everyone. With more than 1100 franchises in Australia, potential franchisees are spoilt for choice, but often choose franchises they love based on their experiences as a customer of that brand.

While this approach means the franchisee brings a lot of passion to the brand, that doesn’t necessarily mean they will be successful, or that the franchise is the best fit for the franchisee, particularly where their perception of the brand from a customer’s perspective turns out to be radically different from the reality of operating such a business. Where potential franchisees allow their franchise investment decision-making to be driven by brands they are passionate about, they can easily overlook proper due diligence to ensure that the investment will stack up as a viable business.

Equally, potential franchisees should be wary of getting out of their depth at the outset by investing in a business with money they can’t afford to lose. Any business is a risk, and while franchising reduces that risk, it doesn’t eliminate it altogether. People who invest too much too soon with too little due diligence and business planning are all too likely to fail – franchise or not.

5 CRUCIAL QUESTIONS

Ask yourself, what is the best franchise for me and my family at this point in our lives given our lifestyle and income expectations?

1. What would you like to do and can see yourself doing every day?

2. Will your family support your investment decision and, if needed, work in the business with you?

3. Are you prepared to commit yourself to a business for the five to 10 years necessary to be truly successful? If you’ve changed your job every two to three years since you entered the workforce, are you really likely to stick with a business between three and five times longer than your longest job?

4. If you’ve enjoyed a nice fourweek holiday every year as an employee, you’ll need to lower your expectations when you become a business owner, as the reality of annual holidays gets substantially shortened or reduced to nothing for the self-employed – certainly in the first few ye ars of operating their business.

5. Nobody buys a business or a franchise to take a pay cut, and yet this can often be the reality for wage or salary-earners who leave the workforce to operate their own business.

The reality of self-employment is that you – the boss – ge ts paid last after your creditors and staff. You might find that the first year or two are very lean, and you won’t be able to match or exceed your previous income as an employee in this time. Are you really prepared for that?

WHAT DOES THE BEST FRANCHISE LOOK LIKE?

WHO’S WHO? Corina Vucic is the director of FC Business Solutions. With over 20 years in the franchise industry, and extensive operational and management experience, she works closely with leaders to take their business to the next level. Whatever their goals, Corina coaches, mentors and supports business owners and executives to maximise success and minimise risk for long-term business prosperity and security.

People buy a franchised business because of the reassurance it provides to what is essentially a small business owner. They want the comfort of a network of like-minded people facing similar experiences. They want to know that there’s someone competent guiding the mothership, protecting their back and exploring all possible avenues to improve the franchise offering.

So how can you find all this in a business? Here’s what to look for as you do your due diligence on various franchise operations ...

1. Weekly email updates – does the franchisor include new marketing, proposed training, changes to standard documentation, planned events?

2. Regularly scheduled liaison visits by performance coaches. From an annual meeting to review and establish business plans, to catch-ups when financial reporting shows a downturn, to monthly phone calls. This program catches problems early and establishes a relationship of trust between the franchisee and performance coach.

3. An intensive care program for franchisees who do end up facing business or personal difficulties.

4. Effective head office communication. Are there phone calls or emails from in-house experts in marketing or human resources, for instance, to talk about new initiatives or changes to processes?

5. Brand pride. Conferences and awards nights can help create franchisees who are proud of the brand.

7. A franchisor utilising communication technology such as Zoom, Hangout and video conferencing to hold forums and provide avenues for open dialogue.

8. Over delivering, under-promising. Talk to existing franchisees to find out if they receive the high level of support promised by the franchisor. For instance, if a new operations manual is scheduled, has it been delivered? When you are in the discussion phase, does the franchisor go over your proposed finances to make sure they are realistic?

9. A strong feedback process. Ask your franchisor, and the franchisees too, how feedback is garnered, and how the business responds to the influencers among the franchisees.

10. Transparency between franchisor and franchisee is crucial. How often does the franchisor share his or her vision with franchisees? Information about marketing funds, adopting innovative practices and adhering to benchmarking are all things that can ruffle feathers if they are not appropriately communicated.

11. Skilled team leaders. Someone who has succeeded in the industry isn’t always a great choice as a mentor and motivator so it’s worth finding out what your potential franchisor looks for in experience and personality when recruiting support staff.

12. Problem solving. What do franchisees in the business think about the corporate team? Do they listen and not judge? Do they act and solve problems? Franchising is often juggling diverse personalities, fluctuating marketplaces and products. But strong systems, twoway communication and an agile, flexible approach can help build success stories.

Which franchise should you buy? One that gives you direction, innovation and great support. n

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