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This article appeared in Issue 1#4 (May/June 2007)
of Business Franchise Australia & New Zealand

The question all intending franchisees should ask their franchisor?

By John O’Brien, Chairman - Franchise Council of Australia

There are four basic layers of training and development that intending franchisees should look at:

Franchisors provide training in operation of their particular business concept and model. How good does it look to you considering what you will have to manage and do?
The FCA offers unbiased information and training in how franchising works practically and legally. Is it worthwhile sourcing?
Will some form of independent training be necessary e.g. honing computer literacy or sales technique because it is not on offer directly from the franchisor as yet?
What is the level of training that has been afforded to the franchisor’s own staff i.e. the people on whom you will be depending for support?

My experience is that generally, incoming and new franchisees consider only the first of these four layers, so we’ll start with that and then move further.

Franchisor Training

The classic catch-all line often seen in franchise recruitment advertising is ‘No prior experience necessary – full training provided’.

On balance, franchisor-direct training is adequate and getting better, but bear in mind that it can mean anything from a yarn over lunch to many weeks of classroom and workplace education covering operations, technical issues, marketing & sales, financials and so on – and in very great detail. To a large extent, it will depend on the complexity of the business (and I should say that some very simple franchises do extraordinarily well).

However it’s also true that some systems still take simplicity too far, for example regarding ‘sales training’ as provision of a standard flyer to drop in letterboxes. I suppose that to some extent you get what you pay for, but I can’t overemphasise the importance of your being satisfied that the training on offer is adequate for you to run and promote your future business. The sophistication of training programs is also a good measure of the franchisor’s experience, stability and interest in your rising success. Of course there is no point in being put through an excruciating training regime for the sake of it. The following points apply in an ascending level according to the sophistication of the business you are entering, but here are some things to consider:

Is the training program formally structured and conducted?
Does it cover areas in which you have potential weaknesses e.g. IT, Sales, Accounting, Business Planning?
Is there practical, on-the-job field training to follow the theory?
Are life-partners invited to participate in relevant modules (say, if they will be handling accounts or taking calls)?
Are the trainers themselves trained to be educators? (There is a big difference between ‘knowing’ and ‘teaching’).
Could the curriculum be at odds with your technical, IT or personal aptitudes?
Once your business is underway you will continue to have questions – how are these dealt with and with what kind of promptness? Are there in-house specialists or tame consultants available to cover off the specifics?
Are there national and/or state conventions at which training is offered, or monthly local business meetings where info is disseminated and franchisee feedback compared?
Is there one-on-one, specialist field coaching available?
Is there an intranet providing franchisees with the opportunity to exchange ideas and experiences and offer help – and does it buzz?
Is there a layer of regional masters to provide personal mentoring?
Is there opportunity to continue meaningful education?
Does the system have government-awarded RTO (Registered Training Organisation) status?

Obviously, many simple franchises would not need to provide anything near the above to provide training that is quite adequate. And I know from personal experience that attaining RTO status involves a massive injection of time and capital – I think only five systems have gone to this length as yet. So the absence of any element of the list above should not disqualify any system from your consideration. You will have to use your own research and judgment to decide whether the training program measures up to your expectations. There are horses for courses.

Understanding Franchising

One of the areas of education that intending and new franchisees tend to ignore is how franchising works and is regulated as a business system.

Franchisors will explain how their individual systems operate but if you are new to the sector, it’s easy to be overwhelmed at the time and miss or misunderstand key issues. What are the bases, advantages and disadvantages of a flat fee system versus a royalty based system? What is a fair and reasonable dispute resolution process? What does the law say you are entitled and not entitled to? The sector’s experience is that this lack of knowledge gives rise to misunderstandings that with a bit of emotional stoking from your partner or lawyer, can escalate into a needless and unproductive confrontation. It’s unproductive because you can become so focused on your cause that your business becomes secondary and suffers!

Australia has one of the world’s best records in terms of low incidence of dispute, but ‘it can happen to you’.

I thoroughly recommend enrolment in the Franchise Council of Australia Franchise Academy’s ‘Franchising 101’ course, either in a classroom environment (major centres) or by distance learning. It is great to be up on your own industry e.g. fast food or home services, but it is also useful – perhaps vital – to understand the ins and outs of the business method that you are employing. The FCA has an excellent membership package for individual franchisees that offers all kinds of financial and advisory benefits for $200 a year. For example, you can make free legal and accounting enquiries to independent specialists who know the franchising sector from A to Z. I think this kind of access to experts not on the franchisor’s staff is invaluable. The FCA is committed to being the balanced voice of all.

Personal Development

Various opportunities for personal development may be offered by the franchisor. Clinics, speakers, forums, intranet access to system libraries and so on. However if the network is not big enough to afford these kinds of resources or has other service priorities, think about seeking independent avenues to keep your skills progressing and spirits high.

Franchisor Staff

The FCA Franchise Academy offers a number of excellent courses suitable to franchisors and their staffs. I think it is very fair for intending franchisees to ask what FCA Academy qualifications have been, or are being achieved by members of what will become their support team.

Upshot

Entering a new business requires a range of skills and understandings that are often outside the experience of most intending franchisees. They simply have not needed them as yet. Entering a franchised business also requires an intimate knowledge of the way the individual system operates, and in my view, how franchising is administered as a whole.

My advice is to thoroughly research the training to be provided and externally available, in the knowledge that the most brilliant concept might not come off for you without the knowledge, skills and feedback to manage it.

My views should not denigrate the huge effort and investment being put into training and investment by systems small to huge. At the same time, intending franchisees must be aware of how important this element of franchising will be to their success, and embrace the increasing levels of education that are available. Few people lose out through knowing too much.

Go to the FCA website www.franchise.org.au for a wealth of information