Franchising Has Changed
This article appears in the Mar/Apr 2016 issue of Business Franchise Australia & New Zealand
Most people still associate the old adage – location, location, location with franchising. It was supposed to indicate a measure of success – everything came down to the location. Bad location = bad results, and so on.
In the much earlier days of franchising it is quite probable that there was considerable substance in the location statement. Early franchise opportunities were often fast food outlets, and then there were automotive suppliers in various forms – for such entities passing trade was absolutely essential to creating brand awareness and the all-important repeat business. If location, location, location equated to success in the franchise, what then has changed? It certainly was not the need for fast food outlets and others that rely on passing trade and high visibility to be very conscious of their prime location.
It is the nature of the franchised entity that has changed. We have moved, and moved very rapidly from a franchise world dominated by fast food and automotive outlets, to a world of franchising that covers literally hundreds and hundreds of different opportunities. We could not hope to catalogue the various brands, industries and professions covered in the space of this article. Needless to say, franchise opportunities exist today in signage, care facilities, financial services, mail centres, flyer distribution, pet supplies and grooming, and the list goes on. What this diversity of offerings has created is a noticeable shift in the physical location of a franchised outlet. Many of these ‘new’ formats do not require the ‘main street’ exposure so common in the past. They can operate from smaller secondary locations to modest franchising has changed office suites. Franchising has also moved into the realm of a ‘no office’ or actual physical location. There are virtual and home-based franchises that operate from almost any location – exposure to the general public is absolutely not a requirement.
The lure of a home-based franchise for many individuals is very strong, especially when in a past life the franchisee was a commuter, spending many hours a week in the daily travel chore of just getting to the office. With the franchise commute time reduced to ‘minutes’ this can be a major plus factor in the search for the ideal franchise. Does the home-based environment work for every franchise and every individual? Naturally the answer must be, No. A franchisor will, as they built out their model, have determined the optimum location
requirements and, in many cases, that research could result in a home-based setting.
The franchise will, therefore, come with a definition of where the location shall be and what it shall consist of, and that definition is unlikely to be negotiable. Is every individual then well-suited to a homebased operation? Again we believe the answer is clearly, No. With the enormous advances in technology, what once took a large amount of space – an array of computers and an army of employees – has now been reduced to one person, a laptop and a cell phone. Technology has certainly changed the face of franchising. That, however, does not automatically mean that everyone is well-suited to a home-based environment.
The majority of individuals seeking a franchise opportunity have a past, or even present, life in the corporate world. They work for different-sized entities, from medium-sized to businesses with thousands of employees around the globe. Common to most corporate environments will be structure. Corporations tend to have well-established internal structures. Individuals know who they report to and who reports to them. They know the ‘rules’ and what is expected in terms of performance and contribution. The organisation provides a structure that often goes beyond just the fabric of the individual business, but extends to take in social amenities alongside the business aspects. For many people transitioning from the corporate world is a considerable change, as they may well have been employed by the same company for a long period of time. Likewise, the change may also be stressful if the change was more the employer’s decision, rather than the employee. Moving from a traditional corporate structure to a homebased franchise can be a considerable leap of faith.
That leap of faith is compounded and becomes a quantum leap when the homebased business is also a one-person business, where the franchisee is the ‘one person’. Franchising has certainly changed, and the advent of the home-based opportunity has opened the door for franchisors to look for candidates that have a different skillset from those where location, location, location was the moto for success. Franchisors in the home-based area are now very much focused on an individual, and their self-disciplined characteristics. It might be argued that selfdiscipline is a requirement of any franchisee or business owner. That may be true, however the motivation requirements of owning a franchise that has a retail façade – and that requires the owner to open the doors at a certain time, and to interact and manage staff – is a very different motivational pull than that of running your own business from your own home.
It is therefore essential that individuals that see a home-based environment as one to pursue, also look at their own skill base to determine if they have what it takes to work on their own, albeit in a franchise system, and to determine if they can write and follow the action plan needed to be successful. A 5-minute commuting time is most certainly a great advantage but it’s what happens when one arrives at the (home) office that really counts.
David Banfield is President of The Interface Financial Group, a position that he has held for over 20 years. He has been instrumental in starting Interface as a franchise opportunity and building it to its current international status. Prior to his involvement with Interface, he worked extensively in the banking, credit and factoring financial service areas.