Franchising has been lauded as a tried and tested way of growing a business by using the entrepreneurial skills and capital (without incurring debt or interest charges) of others.
The ‘Godfather’ of Franchising, Manzoor Ishani, gives his Top 10 Tips for any aspiring Franchisor and what they should look out for.
- Competition – Find out who is likely to be competing with you for franchisees. This means researching who is franchising not only a business which is similar to yours but also any other franchises available at a similar price. Many franchisees want to start their own business and are open minded about what they do but are driven by what they can afford.
- Franchisee selection- Establish and stick to your criteria for those whom you consider suited to operating your franchise- do not lower your standards even when recruiting the first few franchisees or when the growth in your network is not keeping pace with your expectations. If you do lower standards for sound commercial reasons, it is highly likely that these franchisees will become troublesome in the future.
- The future – Ask yourself what are you doing now to encourage your franchisees to renew their agreements when they expire. Franchising is a long-term proposition and franchisors who do not look to the future will find their network diminishing in the longer term.
- Two Businesses- As a franchisor, you have two businesses. The first – supplying goods or services to your customers via your company-owned units. The second – franchising. Your franchisees are your customers and your obligations to them are different and a good deal more onerous than those to your customers.
- Management skills-Improve your management skills and those of your staff. The big challenge your staff (who will be employed) will face is managing franchisees who are not your employees, but independent business people in their own right. Managing them as managers of a branch business will not bring the best out of your franchisees and will lead to confrontation.
- Support- One of the key obligations of a franchisor is to support its franchisees. To avoid disappointment and accusations that you fail to keep your promises, always underpromise and over deliver. This way you will gain a reputation for doing what you promise. Do not fail to deliver what you promise.
- Exclusive Territories- If you are granting exclusive territories, ensure that you have the necessary protocols and mechanisms in place for dealing with turf wars which can break out amongst franchisees.
- Performance Targets- If you impose minimum performance targets, you must be able to justify them and explain how they are calculated. Make sure that they are reasonably achievable but impose sanctions if they are not reached, otherwise you will lose credibility and have problems in enforcing targets when others fail to reach them.
- Standards- Do not tolerate sub-standard franchisees- they affect the whole network and certainly their neighbouring franchisees. Failure by a franchisee to comply with your “system” is a mortal sin. Uniformity of business practices, marketing image and quality and the way in which the products and services are delivered to customers is paramount
- Bad may be good- Remember that it does not necessarily follow that the most demanding franchisees are the worst franchisees. Better to have a very demanding franchisee who is firing on all cylinders and growing his or her business like topsy, than to have a quiet, compliant franchisee who chugs along using you as a crutch.
For further information, please contact our Franchising Team or call 01727 832830.