FRANCHISE: Determining brand’s readiness to franchise

In determining your brand’s readiness to franchise, you run some questions through your current operations.

The answers will reveal what you need to do before attempting to franchise. We continue exploring if your existing corporate culture supports growth through franchising.

Are you ready to treat prospective franchisees in your army as partners, without ceding control of your business? They really are your partners-they invest their time and money to join your army.

So, you need to treat them as such through regular communication, consultation and incorporating their innovations into your product development process. The franchisee council is your most important forum though which to achieve this.

Do you enjoy “being a General”? Failing franchisees taint the franchise network. In the army, generals lead from the front, pulling their soldiers along. In franchising, the franchisor needs similar traits, being a master-motivator able to excite franchisees and pull them forward.

The last area to explore is the franchise opportunity availed by your brand, which must make commercial sense to both you and prospective franchisees. Several questions need a run through here;

Does a franchise operation look financially viable to you? Run numbers to determine the point at which the franchised units reach critical mass-that number where royalties from “x” franchise units overtake profits from investment in an additional company-owned outlet. If “x” is too high, continue with the brick and mortar outlets as you re-strategise, but certainly a time comes when critical mass is needed to grow the business to the next level through franchising.

You will need to remodel your outlets to attain the number “x” sooner. Such remodeling might include reducing the size of outlets and improving deliver to reduce costs while improving profits, thereby achieving a lower “x” faster.

Is the business know-how easily transferable to previously inexperienced parties? Ease of skills transfer is at the heart of franchising success.

If running the franchise requires some specialized skill, then a prerequisite on the franchisee profile when recruiting would be possession of such a skill, e.g. when franchising a firm of accountants, a basic requirement on the franchisee profile would be qualification as a CPA.

Where no specialised skill is required, experience shows that it is easy to recruit and train individuals with zero experience in the business line as they have no preconceived ideas, unlike experienced ones who you would need to un-train then retrain and they would always fall back on their old ways-do old dogs learn new tricks really? A further consideration should be the period of training.

Since franchisees have families to support and cannot stay for too long in training without running their units, short training periods are preferred.

Where long periods are necessary an alternative approach is to allow franchisees to run training units as their own, taking home all revenue and paying all costs, but this requires the franchisor to incorporate their profit from the training centre into the joining fees paid prior to training prospective franchisees.

Will franchisees who employ good effort achieve above average results? This goes back to the brand’s history.

As franchisees seek to fulfil their personal and financial goals by investing in your franchise, the franchise opportunity needs to be in such a way that franchisees can meet and exceed their financial expectations after paying off all business expenses.

The writer is a franchise consultant helping indigenous East African brands to franchise, multinational franchise brands to settle in East Africa and governments to create a franchise-friendly business environment.

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