Getting Acquainted With Franchisors
SIMON MILLS CONSIDERS WHAT YOU SHOULD LOOK FOR IN A FRANCHISOR
When in attendance at The National Franchise Exhibition in Birmingham last spring, I heard many a prospective franchisee discussing the numerous opportunities available. Occasionally a prospect might express concern about the viability of the product or service they were evaluating and the demand for it in the marketplace.
On hearing this, I recommended that they consider the following: If the franchisor were in sectors such as food, cleaning or property then they are in repetitive businesses, so it is likely that the business would be on a good foundation in terms of market. The more salient point is – what does the franchisor do? That is to say: Is the franchisor experienced in leading and coaching a network of franchisees, for instance, or are they good at making pizza? And, furthermore, have you asked them that?
In his book Street Smart Franchising, author Joe Matthews points out that the franchisor needs to have the capital, vision, commitment, culture and talent to build a meaningful brand. Evidence of these five attributes can be discerned through initial contact with a franchisor and your research into their business. Looking out for these values will help you in the search for the right franchise. The differentiating factor is that a high-quality franchisor will know that, first and foremost, they are in the franchise business and are not, therefore, led by the product or service; they understand the relationship they need to develop with you as a franchisee in order to achieve mutual success and benefit.
Tell-tale signs of a low-quality franchisor may include undercapitalisation, lack of a business model you can replicate locally, no expansion beyond their local area, and the lack of a mutual evaluation process for both parties during the recruitment stage.
Other things to consider during the initial evaluation stage include:
Your goals – does the franchisor understand the goals that you are looking to achieve? These may not be purely financial goals but could be spending more time doing what is important to you. Perhaps the daily commute is no longer something you wish to tolerate and a local business is therefore really appealing. Writing out your goals works well.
In his book What They Don’t Teach You at Harvard Business School, Mark McCormack states that only three per cent of his sample study wrote their goals down and 10 years later, that three per cent were earning 10 times as much as the rest of the 97 per cent put together.
Training
What is it really provided for the initial training? ‘Ongoing training’ is a term bandied around a lot in the franchise industry, but does your chosen franchisor really understand that you will have different needs as you expand? Do they help you implement what you have learnt? This is important, as the implementation process is where you can really develop your franchise by learning from a system-led franchisor.
Reselling the franchise
Does the franchisor have experience of reselling franchise areas and do they talk about it when you first meet? Most businesses are set up to sell on at some point and the most valuable ones are those that have strong systems in place, a good brand and do not need the owner to be there every minute of every day in order to succeed.
What is the franchisor looking for?
A well-known CEO with 800 franchisees in 12 countries describes the values he looks for in a candidate as ‘The three Cs’. These are: Chemistry (you get on with people and
the franchisor), Compliance (you are able to follow a system) and Cash (you can afford the franchise, invest in the marketing of the business and have enough money to live on for a year or so as the business takes off).
To these I would add two more Cs. Customer focus (never lose sight of the fact that this is who you and your team are there to take care of) and Culture (the franchisor cares about your success and they have the right culture in place to work through the changes your business may face). A well-developed, high-quality franchisor will recognise the personality attributes that make for a successful franchisee and will be looking to attract those types of people to join their network.
