The three P’s of franchising
So you’ve decided you want to be a franchisee. You’re not alone. Franchising has been a part of Australia’s business ecosystem since the early 1970s and has literally transformed the local retailing landscape.
The reasons for taking on a retail franchise are as vast and varied as the franchise systems in Australia to choose from. For most however, choosing a retail franchise is about owning and operating a business within a supportive environment where you benefit from all of the experience and advice a franchise system has to offer, as well as a recognised brand name.
Beyond the brand, when you start the process of comparing one retail franchise to another, there will appear to be more similarities than differences among the franchise systems. But that’s only when you look at each franchise on paper. The reality can be very different, so in addition to conducting due diligence around the dollars and cents, when it comes to making the decision about which franchise to invest in, equally consider the 3 key P’s of franchising – People, People, People.
Without getting these three P’s right at the outset; the people behind the franchise, the key relationship you have with the brand and the support you will receive as a franchisee, you won’t be in a position to support what are arguably the most important people in franchising, your colleagues and your customers.
Here are three key questions you need to consider before signing on the dotted line:
What is the franchise strategy and who are the key people behind it?
Understanding the future direction of the franchise you’re considering is no doubt top of mind, but have you also considered the people behind the strategy; those developing and directing the strategy? It’s important to have confidence in both the business direction as well as the skills, abilities and style of the leadership team at the helm. Getting to know the franchise leadership team will also provide a window into the culture of the organisation. With culture being at the heart of every business, franchise or not, if there’s no connection from the beginning, there is unlikely to be that connection when you’ve committed to the business no matter how hard you work to make your franchise a success.
The challenges associated with buying into a company but not the company culture only compound when it comes time to build a successful team around you to build the business and create a positive experience for customers.
Who will be my key relationship when I’m in the business and operating my franchise?
In every franchise system, there is one key relationship you as the franchisee will have with that brand that you need to be aware of. Often called a field manager or area manager, this person will have more to do with the success of your franchise than any other person across the franchise system. Broadly speaking, there are four key roles that this person fulfils - to provide support, coaching, direction and leadership.
Franchisors go to great lengths to ensure the people in these critical roles are not only exceptional business coaches and leaders, but that they also embody the company culture. In fact, the field manager’s focus and behaviour is a good indicator of the culture that exists in the business and how the franchisor regards, and wants to work with the franchisee. If there is no connection, or mutual respect between you both, then you may want to reconsider your franchise options.
More than there being an immediate connection, what you also want to understand is the type of relationship you will have with this person. It’s all well and good to have a comfortable ‘coffee shop’ relationship with the franchisor where you talk about the issues you’re facing and how to resolve them, but a franchising relationship needs to be much stronger than that.
What you need to be looking for in a franchise partnership is what many term a ‘marriage’, where the franchisee will do more than help you solve problems, they will work alongside you to identify opportunities to boost sales or profitability and implement practices that will take your business to the next level. What’s important to recognise is that in every commercial marriage, there needs to be a senior partner, and in franchising, that senior partner is the franchisor.
Aside from getting to know your key day to day contact, a good franchisor will ensure you meet with all the key people across the business, from senior management through to fellow franchisees. There is always going to be the good and not so good in any business and existing franchisees will be best placed to share this and enable you to make a balanced and informed decision about investing in one franchise over another.
What support does the franchisor provide you and what does that support actually look like?
As a franchisee, you’re not just buying into a brand, you’re buying into a proven franchise system. The challenge is, on the surface the support a franchisee receives through each franchise system looks remarkably similar. When in reality, some do not provide a lot of support at all and the franchisee is left to go it alone as you would in a startup or if you were to buy an existing operation that is not franchised.
So when you’re making a decision about which franchise to buy into, understand exactly what that ‘support’ is going to look like across key functional areas such as operations, merchandising, marketing, IT and finance in addition to the support, coaching, direction and leadership you will have through your field manager.
Whether you are a new or established franchisee, a franchise group’s systems and support mechanisms along with the key support people in your area should be able to recognise your needs and assist you to build a profitable business from the ground up.
Always keep in mind that the level of support you receive through a franchise system does have strings attached - you are required to run your business within the constraints of the franchise agreement, complying with rules and processes, and if you do breach the agreement, you may risk losing your franchise altogether.
Retail franchisees are however quick to point out that while there are support mechanisms in place, you can’t be a part-time franchisee and be successful. Sure, you may get the benefits of being part of a national brand and network, but at the end of the day, you’re still running your own business and to be successful in retail, that means you need to commit 7-days a week. Many say the benefits of owning and operating your own franchise business outweigh any sacrifices that need to be made but this is a very personal decision.
So before making the move from employee to franchisee, take the time to investigate the 3 Ps of franchising alongside the dollars and cents. In the long term, taking the time to do this will pay dividends.
Richard Wynn is co-founder and managing partner of FutureYou Executive Recruitment. FutureYou was formed in 2016 on the belief that there is a better way to connect outstanding talent and Australian based businesses.
Richard has more than 23 years’ experience in the retail industry as a professional and in the recruitment of senior and executive level professionals in both the UK and Australia.