Archive for category Franchising

The “easy in” franchise start up.

For the Franchisor: How do you make the start up phase easy for the Franchisee?

For the Frachisee: How does the Franchisor make the start up phase easy for you.

This is the sort of question both parties should be asking themselves and for the Franchisor reviewing it often to make sure they have the best systems in the business.

Lets take a look at perhaps a usual scenario… the Franchisee joins the business, signs up and does the training, they start the business and pay the usual franchisee fees in the first month or so… it’s baptism by “deep end” immersion!

Lets step back a bit further and take a look at what really happens. For some this business opportunity is a start up, no business experience, and while there is probably great support systems in place after the training, some may not know how to use them, or perhaps might feel as though they would be embarrassed to use them. Although the Franchisee is keen to start there will probably be a range of issues they have to contend with, a new start, a change of work habits, new systems, training to learn… and the list could go on… and ON!

It might be suggested that the Franchisor’s role (in part) is to make this transition phase as simple and easy as possible so they can build the esteem of the Franchisee (vital really). So here are a few suggestions that could make a solid point of difference to the way your franchise business starts its new recruits (remember to use these as selling points!)

Fees - Consider not having the first two or three months of fees, and or making the fees a low start option (e.g. they pay an increasing percentage in the start up phase) To redeem the loss you include it in the start up fee for buying the franchise.

Income – During the training period and the first few weeks of set up, there is probably a loss of income, if you do not have an income guarantee, include a short term one to take the pressure off. Let the franchisees focus clearly on the training and getting things right.

Support – coaching – mentoring – training – Training is usually a given, the coaching, mentoring and other forms of support may be voluntary, or the onus put on the Franchisee. The aim being to ensure the Franchisee is a “happy camper” your role is to make these aspects more robust and easy to implement. If the new recruit is thrown in the deep end, how can you provide ‘services’ to ease the pain and ‘stop them from drowning”? Lets face it there are too many Franchise horror stories and the time stop this is at the start. If you have support staff in contact with franchisees how well do they coach, mentor and support?

Advertising – A vital part of the business mix, advertising can make or break a start up business. How many ways can you build extra value into the start ups advertising to ensure added value and possibly more customers? Show them the Press Releases you have sent out to their local media, then scour their local papers for articles that have been printed and show them, look for opportunities in the local media and utilise those to ensure the start up phase is happening with a lot of interest. Perhaps consider teaser adverts to build intrigue. Of course all the extras are in the price of the franchise.

List – Frequently asked questions for new franchisees (perhaps in an intra-net) and provide a whole range of support materials for them, from simple short video examples to PDF type documents or power point presentations they can get answers with very quickly. give the peace of mind in knowing the answers are there 24/7 so they do not have to wait for an “Area Manager” to call them back with an answer on Monday and it’s Friday night!

Family – A little touched on area of business… but the family support is vital to how the new franchisee feels. What material can you provide to raise their awareness of this new change to their lives? How it might effect things, the rewards it might bring later on… and so on. Most of all though provide something, even a brochure or leaflet is better than nothing and encourage them to get involved. For smaller franchises it might be as simple as inviting them to help out with the bookkeeping (if they have those skills) or delivering pamphlets in the territory. Any way they can help out can be very useful to the family stability in the early phases.

Thats the list for now, but keep searching for ways to help the new recruit. For Franchisees, look for franchises that offer as many of these support devices as possible and ask existing franchisees about how well these worked in reality.

For more franchise info…

The entreprenurial franchise?

It’s probably thought of as a no go zone, the franchisor wants their members to follow a system, and the franchisee wants to have a system that ensures ongoing viability, and therefore $$ in the bank to fund their lifestyle.

For most the entreprenerial activity in a franchise will happen at the “top end”, where the franchisor develops the business and puts a lot of effort into finding opportunities the franchisees can utilise. This is the real entreprenurial catalyst area, being proactive, being innovative and taking risks… But wait, what would happen if the franchisees did that too! ARRGH! You want them to follow not to lead… well yes… to a point.

Imagine you have a franchise with 100 franchisees, and only you provided the system and there as no feedback, sounds ideal right… but What if… they were to find ways of doing things better and pass them on to you. If each of them put in one small idea that impacted the business by 1% then you would have a business that was 100% better! (okay stop laughing its a concept not a mathematical model! But you get the point.)

Many franchises have fully functioning adults as franchisees, and over time you could utilise their collective intelligence to make a difference to the overall business, to their business to our business experiences as customers. Often all you need to do is ask.

- Provide an avenue for the franchisees to have input into the business, from start to finish.

- Encourage them to think outside the square (not to create headaches) to find ideas and opportunities that could make a positive difference to the way the business runs.

- Explore focus groups and think tanks so they can feel part of the whole business and ts overall success.

- Become a business that is known for listening and then acting when appropriate. Then encourage your franchisees to do the same.

Whatever the orientation of your franchisees entreprenuerial or not… utilise their expertise and experience to build a business that can offer greater stability and strength, in the long run a well managed entrepreneurial franchise will always beat the compeition hands down, due simply to being one step ahead of the game.

The one BIG thing

Experiences are everything, if you have any sort of business that sells to people then the experience the customer has is vital to your operation.

In a franchise the franchisor would then have a greater duty of care to ensure the prospective franchisee has customer service skills, is customer aware, is able to communicate effectively and willing to go the extra mile.

Apart from aiming to build exceptional customer experiences of the franchise business the aim is to also assist the franchisee to build repeat business and know they are well ahead of their competition dues simply to providing exceptional experiences.

In the same vein they should also be serving the customers (the franchises) so they can feel the experience of great service. (lead by example).

So in the end its about finding ways to be exceptional in the people stakes, being able to connect, communicate and value their part in the scheme of things.

To start the ball rolling, consider…

- Have I or any of my staff called a franchise to just have a catch up chat (not because I have anything I want to tell them, but just because I could…)

- Have we kept an online blog going of what’s happening in the business for our franchisees?

- Have we found ways of opening the lines of communication further so they feel they can call us at any time, (and do they? If not why not…)

Take these ideas further… Now show your franchisees how to do it (you are the role model here…) give them ideas on how to build the customer experience so it becomes a rock solid foundation for them to build a successful business from.

Remember it’s all about the experiences we have, yours, theirs and the customers…

For more on franchising

Open the floodgates!

Who is blaming whom? In the failed business stakes there are those with the crushed ego from the fall who want to blame anyone but themselves. They will claim the system failed them, customers failed them, area supervisors and suppliers failed them… then of course the franchisor failed them!

In all the blame game generally gets people nowhere and often it happens too late.

No one wants a business to fail, so what happens? really it’s a simple cycle, born out of the old adage resistance, resentment and retaliation… lets take a stab at a possible scenario.

A franchisee gets started and is niggled they can get a support person to call them back from the main Co. (its been a busy time for the Co recruiting and starting a bunch of new franchisees). the franchisee gets miffed and start to build a sense of resistance, and becomes standoffish despite the supervisor apologising profusely.

In some people this resistance clears up and in others it festers in the background.

If this and other things continue the franchisee starts to resent the situation and the hollow they now find themselves in… (Often though these things start from a small issue though.) The retaliation when things have multiplied out of control becomes a range of finger pointing and blame and before long a hostile situation looms and any issue seems to push things further into a downward spiral. The flood gates have opened and Voom the rush of water knocks over everything in its path.

Seriously it does not take much to see this happen, in a franchise, personally run business or in general life!

Here’s the aim for the franchisor, stop it happening before it multiplies.

Herea re some simple points to make things happen more effectively…

- Open the Company communication floodgates – Make the franchisee see that everything is being done to assist them, pester your team to find out who they contacted in the past few weeks, and if they haven’t why not.

- Open the family communication floodgates – successful businesses have family support, its important that you know if a franchisee has this support if not find ways to boost it and get the family interested, supportive and involved.

- Make it a great start up – Before the business gets started make sure the franchisee has the right mindset and attitude to run the business and is willing to learn ways to build their skills in all areas.

- Train them and train your people, to be exceptional communicators – To do this, find ways to get them together to really get to know each other (and don’t wait for the next conference to make this happen.) for people to REALLY communicate effectively they might need to work more like a family.

- Make BIG! promises - And KEEP them. If you say you will jump, make sure you tell them how high it will be. Hollow promises cause a lot of problems. To make sure they happen set up simple and effective systems so your team can ensure they are done.

If you make these a major priority for your franchise business you will form a positive foundation to really set up a caring company that shows it is interested whole heartedly in its members. That’s my view on ways to make the 3 R’s that can damage any relationship (in this case business relationships) and make it less of an issue. Hopefully this is enough to calm the madding crowds!

More franchising articles

The Franchisor has a duty of care…

In business we all have a duty of care to some degree, we also have to make a profit at some stage by providing a product and or service that’s what makes us a business and not a charity.

In franchising I see it that the duty of care is still there, its perhaps very different to working directly with an employee but it still exists. In some areas Franchisors have been criticised for some of their practices and over time regulators have put in a lot of work to ensure unscrupulous operators are out of the system or not supported, by putting into place some devices to make their business be seen as one that cares at a deeper level will only assist them in sales and their longevity in the market place. If the duty of care is lacking there can be issues arise that cause more friction and pain than good will and esteem.

So what sorts of things can they do to bolster their duty of care?

1. Stop the churn - Churning is a term used to describe a person giving up their territory and the main company reselling it at a future time, so they get a number of start up fees from the one territory. This great for them but not for the person trying to sell their territory. it causes a sour feeling for the seller and perhaps some tension from the franchisors side, over time the wound may well heal but the stigma remains. if they had worked with the initial owner to create a business that was glowing, and perhaps create a ‘passive income’ then they would not have to sell, in fact they would have created an asset of greater value.

2. Make the start up better – Sure new franchisees get training and before the training is the sales process. What if before the sales process came a due diligence checklist? Or a guide to what makes a successful franchisee in their business… It would be great to have info that showed a scenario of how to make the business work rather than a risky stab in the dark. It could also be a model of how to operate the business if they get into it. It serves two purposes, to inform as to how the business might run, and as a qualifying device to pick the right franchisee and not just any franchisee. Take it further and insist they spend at least a week or two helping out another franchisee, then ask if they really want to do it, find out the whys and why nots and build on that to make the business stronger. Even go so far as to provide them with a simple financial checklist or spreadsheet, that shows the average costs of running the business and then do some financial from there, it could be an excel preadsheet they use ont he computer to punch in various figures to see what they could make, not trying to figure out roughly what’s possible.

3. Train better – It’s one thing to learn about a product or service but another to learn about business skills, even if you have some already. Business is such a diverse device that one type of business may not mean the skills are transferable. Role plays, scenarios and various practical examples can be useful as well as the mechanics of leadership, finances, marketing, HR and so on. The more info you get to work with the better. Then add to the training later on, seminars, franchise group meetings and conventions go some way to doing this so make it a feature.

4. Communicate more – So you have a new franchisee, a contact at head office and over time they get disgruntled and you wonder why… make the effort to have the team keep in contact, when you contact them they say, “We would be more productive if you head office people did not keep calling us!! Ha ha! but hey keep it up the support is great!” An email occasionally is nice, a newsletter okay, but the real McCoy of face to face or over the phone contact regularly makes a real difference. Be there for the franchisee, not just pay lip service to it so they can really sense you care.

5. Use your FAC – The franchise advisory council or whatever you choose to call it, should be a vital link to the inner workings of your organisation. It should be the guide to improvement, the quality development device that you call on to get momentum happening. Lets face it the franchisees are the customers to the franchisor so the FAC becomes the focus group to learn from. Well trained FAC’s can become mentors, and get feedback from the people at the coal face.

6. OHS – In most cases where a duty of care is mentioned, Occupational Health and Safety is the area where it gets mentioned. The same here, all the above points are about caring for the franchisee physically and mentally. So consider using some form of OHS plan to find ways pf helping the franchisees. It may even be as obvious as showing them ways to boost their own OHS in the workplace and becoming “safety watch its” that may make a difference.

7. Minister and discipleship – Not totally in the religious sense, but in the setting of standards, the leadership of teams, the passing on of the “good word”. Be the way, the truth and the light… Be the person they respect as a leader, be the one who is the font of knowledge and is there with the right sort of advice and helping hand they need when they need it. It’s more of a holistic approach to caring and your role in the organisation as the leader. Consider it as mentoring, coaching, leading, ministering, discipleship and or anything else you care to call it, be their right hand and be it brilliantly!

8. Do the internal stuff - It’s one thing to work with the franchisees, but how often do you focus on your staff? How are they awarded and rewarded for their contribution above and beyond the $$ they earn. If the franchisees and prospective franchisees are doing their job they will notice the turnover of staff, any annoyances in the background etc. Your job No: 1. is to build the esteem of the internal team so that they glow with enthusiasm and delight at being part of your team and the things it achieves. Tey in turn will look out more for the franchisees and any issues they have more readily.

None of the above points are meant to be easy, in fact they might just add to your workload a little, However if you want your franchise business to be exceptional in all it does, these are a guide to finding the way forward and the franchisees will love the care and attention you show.

Choosing a supportive franchise

Starting in any business is fraught with challenges, in franchising its the same, there are challenges. The aim however with a franchise is to diminish some of the risks so you can begin with a solid system behind you that offers training and support as well as a proven brand people want to buy from.

It is important therefore to select a franchise that can work with you in a way that suits you and while people have different things they want from a supportive business arrangement here are a few points to guide you.

Note that prospective franchisees have a great deal of power, the sales person wants you to buy, you are looking and therefore have the power to say no, the power to ask lots of questions and can walk away at anytime if it does not suit you. Use this “power” to make sure you are getting into the right kind of franchise, because a rushed decision can cost you dearly over time if its the wrong one!

This article is part of a series on franchising, you may like to see the first one in the series, it’s here.

Business and practical skills training - A caring Franchisor will provide both, therefore, as you work on the business you can work in it as well. The training provided is vital to ensure you are able to tackle the business with ease, not with trepidation. So ask lots of questions about the training and how they measure the results of that training. E.g. do they follow a competency based assessment model to ensure you meet a set std or do they simply show you and expect you to figure it out later… A supportive organisation will make sure you know the right way to do things and how to build your business to be all you want it to be and more.

Ask for examples – Of how they have helped existing franchisees with their businesses, then get their contact details and verify that this is the case, check for gaps in the communication they say they are offering and the actual communication taking place. The differences can be huge, so the smaller the difference the better. I would also ask franchisees how the organisations leaders operate, if they are leaders and how they prove that (note, not dictators but leaders… their team love them, the franchisees love them)

Fluff and bubble – Some franchises have franchisee meetings, seminars and or conventions, are these full of “fluff and bubble” or are they of real value to the franchisees? Yes you should be asking all about these things as they may well form the backbone of support for your business after the initial training. A caring and supportive franchise will certainly want to make these sessions power packed, relevant and to the point.

Transparency – Is the main Co transparent in ALL their dealings? Of course most will say “yes” however does that include the financials? Head office staffing issues (happy, sad, turnover of staff) all these things can have an impact on the stability of the overall organisation. Of course it may not be as transparent as a cooperative group where the members are like shareholders and an active part of the organisation, however the amount of transparency is useful to know. Often people trust a transparent organisation more than one that appears to hide information.

Ease of information – The main Co should be way to get info from, they should have been through the hoops before with these issues and have the ability to answer the questions with ease. If things are starting to become challenging with a few questions, imagine how they might be in a few months after you joined their business. the aim is ease of working with them.

Passive income and you… – Ask them about how they can help you specifically to build a business that provides you with passive income, they should have an easy to follow system to assist you over time. Passive income? Income where you don’t do too much to get a return on your outlay. Initially it would be build the business, make a profit… then you install a manager to run it for you, you do little and reap the rewards, mainly income.

Sales reps and you… – The sales rep for the company could be anyone from the CEO to the State or area Manager. Ask yourself, did they respect you? This can show up as a range of things, like, were they on time? Did they have a clear presentation? Did they stick to a set time frame? Did they bring material to leave you with? Did they do anything else they promised to do? I judge this on a ten point scale, if they start at a ten and then fade, from there I would start to evaluate if it’s worth it below say a five or four. I am not saying the rest of the company is like them, but chances are the first impression can be a vital indicator.

That’s the list. Its a starting point to ensuring your investment in the business system is one that ensures you will be cared for, if not I would ask is it worth it? Remember this information is provided as an educational device and not speific advice, the decisions you make are up to you.

In the end it’s all about a great business model and the relationships they build from there.  If you feel it can grow and blossom or fade and wither. I know which I would prefer!

The hard yards of franchising

When it comes to buying a business or starting out in a brand new venture, it is vital to do your “due diligence” so you can know if the business is right for you. In franchises its the same, however it is reasonable to expect the franchisor should be able to supply you with more information beyond the usual sales pitch so you and your support team (accountant, advisor, mentor, business coach etc.) can make a rational decision on what’s possible. It should alsoguide you to see if there is a suitable match between your skills and attitudes for the business. In an earlier post on franchising I gave a broad outline of the major things to look for, now lets go deeper and see what else you might do before you make a “leap of faith”.

You will have found a few franchises worth looking into and now you are about to come face to face with their sales representative. Sure they will make it sound all nice and rosy, but you can cut to the chase once they have done their presentation and give yourself more info to work with if you ask a few poigniant questions. I have listed a few questions and some likely resposnes so you can second guess their responses and get greater depth. (That’s the theory!)

Is there growth potential in the market? – The usual response might be “Oh sure we have doubled the amount of franchise businesses in the last 12 months and it’s growing from there.” This may well be true, your aim is to find out how many were sold in the last few years so you can compare, then ask about how long people stay in their franchises, e.g. how many get out at the end of the first contract period? And what statistics do you have that you can show me the customers are growing, not just the franchise numbers? (It’s one thing to project to sell x franchises and entirely another thing to actually do it! And another thing to have the customers to buy what’s on offer. They should have clear statistics showing the amount of sales in existing franchises.)

What opportunities exist? - “Oh there’s lots, things are going ahead in leaps and bounds, let me show you a map of your suburb” You may be looking at an area to explore, however do the right thing and ask to see a map of where they currently are and where they want to be, some have maps of the country with different coloured pins in the various territories and you should be able to see the sold ones, and the one’s up for grabs. For you this gives a big picture view and lets you see what other areas might be available for expansion later.

Tell me about the competition? – They will no doubt tell you about other franchises in your area, some may even “bad mouth” them to build themselves up. What you really need to know is if there are many smaller players that could eat into your business, if they have done the research they can tell you more, if not they might be at a loss to know more about your region or territory and the actual customers you can expect to see through the door.

How long did it take for the average franchisee to get a return on investment? – “Of course this varies and its so hard to tell.” But they should be able to do a model of the AVERAGE so they can give an indication of the return. Imagine putting $200k into a business but not getting a return on that investment for 12 months, that could be very alarming… better to know now than later. If the franchisor does not know the answer, then ask some of the franchisees, if they don’t know maybe the training and support team can tell you… or maybe they have no idea, remember the aim of buisness is to make a profit, so they should be abel to tell you when on average that might happen.

Does the business develop into a passive income stream? – Who wants to work all the time, if you can get a return on your investment to the degree that you do not have to work, then that might be useful… so ask how many have achieved that, then get their details, if you sign up they should become your mentors! or if nothing else a great point of research info on the company in question.

What hours does the average franchisee put in to make a real go of the business? – Again it’s profit, and the how hard do I work question. It’s not a job you are buying, it’s a business system, it would be ludicrous to go from working a 5 day week to a six day week for the same return or even a lower return! Sure the change might be great (sick of the old job?) but how long will that last?

Staff, are they easy to get and train in this industry? – Back to the passive income section, you will need people to do it for you right? So lets make it easy to do, not a struggle. Some franchises will have people queing up to work for them whle other will avoid it due to the hassle.

This list of questions is a starting point to choosing a suitable franchise, its up to you to develop a longer list of questions but these ones will probably be the key ones in time. Enjoy the hunt for the right business for you, I ope the list makes it a little easier at least.

Here is a link to a checklist on franchising questions (Australia) a prospective franchisee should ask. Franchise Checklist

7 steps to finding the right franchise

With hundreds of franchise business opportunities to choose from it can be a daunting task to find the right one, retail, service based, business to buisness and each has so many options avaiable, and to top it off the costs involved can make the choice easier (less options available) but harder (cheaper does not mean quality will follow).

If you have not been in business before find resources on getting started in business (Business forums, glossaries of business terms and books) and familiarise yourself with some of the terminology used, so that when you get into the research you can have a better understanding of what they are talking about and how it might effect you. It can be confusing to try and get your head around terminology you do not understand when a sales person is doing their level bet to sell you something.

Here are some tips for making a selection, remember this is not specific advice, but a starting point on the road to your education on franchises and their ability to provide what you need. Best of luck with your decision!

1. Competition and demand for the product – This is basic but can be overlooked, just becuase a franchise has developed a business system does not mean people in your area will want to buy. Ask about and do your own research on the competition in your area, (just because there may be none at the moment does not mean there has not been some in the past which may have learnt the hard way that the locals do not buy that service or product.) – Is the cost to the consumer feasilble? – Is the concept one that your community (or territory) finds okay and wants to utilise? – Is the brand brilliant? – Is there going to be sustainable demand for the product so you can be readily rewarded for your efforts?

2. Profitability and costs – This is what business is all about, you are not creating a charity, so you need to know how profitable the business is, or is going to be (and how long that will take!) Ask if the profit they might quote to you is after wages (your own included…) too many people find the costs too hard to handle and the profitability is not there despite many hours of hard work and determination.

3. Ease of operation – Does the company provide a simple business plan? – Simple operational systems? – Do other franchisees follow it? – Does it work ALWAYS? – How does Head Office respond to requests for assistance in this area? Now ask yourself this, if I am going to buy a busness is it going to be easy to run or a pain? I know what I would want! I also know that in time I would want it to be able to run itself so I can enjoy the passive income it can provide.

4. Support - Like anything a business can “fall over” with out the right foundation and support. You will need support from the company’s head office, your family and friends. This can include moral support when things get challenging (and they will!) Training, meetings to assess the group performance (Franchise meetings), one on one support from a company “area manager” or similar. Now ask yourself, am I able to listen to this information and put it into practice? Will I be able to work with them? All of this adds up to ensuring your business success.

5. Costs – There will be the start up fee, ongoing franchise fees and of course your overheads (the costs involved in running a business.) This is probably a good time to involve your accountant or even a bookkeeper, to work out some of the costs involved in running the type of business you are thinking of. For many people they go from being employed to running a business, they see the money come in and then (almost mysteriously) go out again! It can take a while to understand what’s taking place and how to handle it, for some what’s left after the expenses is not enough to live on. Understand the costs involved and even project what level of work is required to meet the costs so you know what sort of effort you need to put in to make the business thrive, not just survive.

6. Me! – Can you do it? – Do you have the skills required? – Can you learn the skills? – Do you have the right attitude? For many the answers will be yes, yes, YES! But in reality often this is due to the emotional excitement of the thought of running the business, not based on reality. Ask lots of questions of family and close friends. Chat to the company about how they go about assessing prospective candidates (their process should be vigorous!) Then ask yourself am I really up to this?

7. Research – Do lots of research, chat to many of the existing franchisees, and ask them all the same questions so you can really gauge how things are from the other side of the business. Get yourself into the business and offer to work with one or a few of the operators for a few days, pick their brains to save you a lot of stress later on. Find out what sort of hours are they putting in to the business to make it work, and watch out for two partners working and taking out one wage, it can look very productive, but in reality its two people earning half as much. When chatting to other franchisees, ask them about the franchise support meetings and the value directly to them, this an give a good window into the inside of the business. Also ask how many franchise owners currently make a passive income out of the business?

Thats the list. If you get into any business I wish you all the best, and franchising should offer you a great deal more than just trying to fly by the seat of your pants in your own start up phase, but you need to find out exactly what that is and how it will work for you, or not.

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