Franchising has exploded in popularity as a growth strategy and there are
many experts making a lot of money telling successful business owners how to
franchise, but is it really the best route to market?
Speaking from my own experience, having both owned franchises; worked with
both franchisees and franchisors and also having franchised my own
business in the past, there are many things that the franchising experts don't
tell you. For example, I do not recall anyone defining the real challenges with
franchise recruitment - especially at the early stages.
Neither did they tell me about how my systems would be challenged to the
very core by entrepreneurial individuals whose natural instincts were to
innovate.
They didn't tell me the challenges with managing relationships and that the
franchisee/franchise manager can be a tricky relationship at the best of times.
The common ground is that the franchisee and franchisor both want to maximise
the return on investment on a consistent basis, however, how they each go about
it often could not be more different.
Throw into the mix the new trend of "Social Franchising" where
social and community groups either franchise their business or take a franchise
to be run by the group. There are some serious questions to be asked about the
concept of mixing the commercial ethics of franchising and the cultural ethics
of the group.
Firstly do the committee or management team of the community group have a
clear understanding of their new role? Instead of focusing on delivering a
valuable and profitable service/product to their client base, they will be
spending a significant amount of time managing and supporting another group,
their franchisee, with their needs, issues and challenges whilst also policing
their brand. I was only talking to a franchisee yesterday who was explaining
that the culture within their territory had a marked effect on the business -
something the franchisor had never considered!
Secondly does the group have the correct skill set and cultural drive within
the organisation to carefully select and manage another group with potentially
different drives and work ethics to run a successful franchise? There is
unfortunately an extensive list of failed franchises where the franchisee just
didn't have the resource, skills, capital and/or grit and determination to make
it.
Although franchising on the surface appears to be a relatively low cost,
lower risk vehicle to grow your business, before you make your decision you
need to speak to plenty of experts. Ortus run an excellent programme which will
answer many questions. Knowing what I know, I would also advise you
to take the time to speak to both franchisees and franchisors in a variety of
sectors to understand the reality of what you're about to launch yourself in
to.
One thing I can guarantee you is that it is not an easy ride. Even though
the team I worked with in my franchise and the franchisees and franchisors I
have worked with and for are lovely people, (many of whom are still friends),
they all have their own agendas which influence how they think and
behave.
My advice is to think carefully and do your research thoroughly before you jump
onto the fast growth franchise express!
Image courtesy of renjith krishnan
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