3 minute read
Franchising Seriously
Franchize Consultants explain how to build value and mitigate risks
While franchising is a great way to expand and build value in a multi-site business, the complexity involved in setting up or running a franchise system is often under-estimated. There is no one simple form of franchising or licensing that makes things magically easy.
Underpinning any franchising programme are a set of foundations that bind franchisors with franchisees, and provide the basis of the franchise’s knowledge, direction and support. The development (or improvement) of these foundations should be viewed as an investment in quality rather than a cost-saving exercise.
Foundations should commence with a comprehensive franchising strategy and financial assessment, and conclude with a franchise agreement, manuals for both franchisee and franchisor, and a range of relevant tools and resources.
The franchisor then requires actual management systems ranging from governance and planning to recruitment and onboarding, as well as franchise operations, marketing, performance management. These provide a strong basis upon which to grow franchise system value and manage risk.
Serious business optimisation
Franchisees may be motivated to perform by owning their own businesses, but that will only take them so far. To ensure that franchisees maximise the value of their investment and territories, franchisors first need to select franchisees to their concept’s needs, and then provide them with quality manuals, training and support so that franchisees can execute all critical business functions and activities capably.
Support needs to continue through business management systems, performance information, benchmarking of Key Performance Indicators (KPIs), business planning, group marketing, field visits and coaching. This requires a serious upfront and ongoing commitment, and includes many aspects that are intensive both to develop and manage.
Serious compliance
A brand is one of a franchise system’s most valuable assets – and reflects a customer’s experience with the total operation. It follows that a franchisee cutting corners on service or product delivery, or another element of the customer experience, can have a potential impact on the total brand –affecting all franchisees.
A lack of legal compliance can also lead to exposure or sanctions, impacting brand value. Recent examples include issues relating to employment compliance, and breaches that name and shame the total brand rather than the actions of a single franchisee.
For franchisors to protect their franchise’s value, and the value of individual franchisees’ investments, they need to make a proper investment in manuals; systems; assessment tools; online and physical ongoing training; field visits; mystery shopping, etc. All of this costs money and management resource. It is an ongoing investment which should not be (but often is) underestimated, and needs to be reflected in the fee structure.
Serious change
To achieve good outcomes for both franchisors and franchisees, franchising requires a serious long-term commitment to system and management quality. Sustaining the network through constant and increasing changes depends on this.
‘Multi-award winning Franchize Consultants has been helping small, medium and large companies to take franchising seriously since 1989,’ says Dr Callum Floyd, Managing Director of Franchize Consultants.
‘Contact us to find out how we can help you.’
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Franchize Consultants
Contact Dr Callum Floyd
P 0-9-523 3858 M 021 669 519
