Best Practise Franchising
Thinking of starting a franchise or even buying a franchise? What are the best practises that good franchisors should adopt in order to attract and retail quality franchisees? If a franchise can’t meet these key points then find another system to invest your hard earn capital into.
These easy to understand tips and pitfalls will give you a heads up on what you need to consider.
Before you even consider developing a franchise system you need to develop documentation and manuals and have a system that is scalable. Franchising is not about making money from selling franchises, rather about ‘clipping the ticket’ from the profitable sales that your franchisee makes on your behalf. The next step is to understand the legal arrangements in your country and any franchising code of conduct that may exist.
If you are a multi-franchisor you need to ensure that your franchise concepts fit together eg entertainment or service industry, not a combination of both. Also don’t over integrate. Each Franchise system should have their own GM, sales group etc. But have a centralised back office for legal, franchise sales etc.
All franchisor, when speaking to potential franchisees should ask the MAN questions:
M – Money, do they have enough
A – authority to make a decision
N – Need; why do they need our business
Once a franchisee is selected, the franchisor must build a relationship in the following areas:
- Legal – rights & risks
- Psychological – trust & commitment
- Commercial – ROI & bottom line
- Help franchisees to make money
- Help the organisation make more money
- Must be right for customers
- Must be right for the brand – IMPORTANT
The process from here is about continuous development – recruiting the right people to run your franchise that also have the right attitude who in turn that you train effectively. The cycle is:
1. Attract & retain the best
a. Screen buy a job applicants out
b. Advertise for staff, using social media is becoming more common
2. Be responsive
a. Get on the front foot
b. Supporting franchisees especially if there has been any natural disaster in the area
c. Strong marketing (local area, radio, etc)
3. Effective dispute resolution
a. It will happen
b. You need a system
c. 1st step resolution – get an outsider to help work through a dispute & have rules around this
4. Embrace technology – have the right tools for your team
5. Evolve – net promoter scores, ecommerce business models
The most important tip is to treat franchisees as business partners and to get them involved in your business.
Recently the Franchisor Wheel of Excellence (Best Practise) has been developed:
- Recruit quality franchisees
- Mentor franchisees for performance. Quick copy system for financial performance group – helping them to get better
- Listen to franchisee feedback – includes consultation
- Engage franchisees with the brand
- Lead with credibility (#1)
- Must listen, show concern
- Franchisor KPI should be franchisee profitability
· Need to set the system – rules, system, procedures, code of conduct
· Franchisee must make $$$
· Cultural fit with franchises – Strategic HR Management
· Help franchisees by being a BDM
· Business partnership focus
· Franchisor KPI of franchisee profitability
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