Franchising is about…operational systems
Globally, franchised businesses are considered more successful than regular start-up businesses – with the failure rate of franchises at on average 10% or less to independent businesses over 90% in the first few years of business.
Although the success of any business ultimately depends on the person who owns and runs it, a franchise business, with its business format system, offers a greater degree of protection from the cold winds of economic disruptions. Its support system of testing, training, operational systems, marketing and bench-marking is down to the basic fact that they succeed because they follow a tried and tested system.
To ensure a high level of commitment from franchisees, the franchisor has to ensure that they have a strong support system in place. This will strengthen the business for both the franchisee and the franchisor and ensures that all franchisees feel comfortable about all aspects of operating the business. The only successful franchisor is the one with successful franchisees.
Every franchise company needs to make sure that its business is structured so that its franchisees needs its services on a continuing basis and, consequently, will want to go on paying their franchise fee/royalty. Franchisees will then also play a positive and constructive role in building your brand. Remember that existing franchisees are the best advertisement for a brand.
The Franchise Disclosure Document of Franchise Agreement must outline the support the Franchisees will receive from the Franchisor.
The best support and ‘know-how’ can be transferred to a franchisee by way of;
- Support and Assistance
- Training – from initial training, recurring training to ad-hoc training
- Operations Manual
Pre-Opening
- Site Selection – selecting the best possible site to position the business
- Set Up
- Team of Experts
- Marketing
- Manuals
- Build to be Successful
Site Selection
Any successful store is dependent on the viability of a good site. It is of the utmost importance that a site is evaluated thoroughly for suitability. The right location is one of the key factors of success; good and suitable sites also lead to sustainable success for the franchisor. The Franchisor should visit the site with the franchisee and assist with the negotiation of the lease. It is important to ensure that the rent is affordable.
Set-up
During the ‘building’ of the store the Franchisor must have an operations expert on-site throughout the construction process that can assist the franchisee with the contractors and sub-contractors. The pre-opening phase should be carefully controlled as costs can easily and quickly exceed the budget which makes it difficult to reach break-even in the prescribed time.
Team of Experts
A team of experts should assist the new franchisee with putting it all together. That would include the Introduction to Suppliers, Operational Guidelines and System Implementation. An appropriately informed and equipped franchisee is a successful franchisee.
Marketing and Advertising
Franchisors should provide a pre-opening marketing and promotional plan that extends past the store opening and includes brand building and promotional activities. It is always good to tell customers about the brand before opening in a new location.
Manuals
- Pre- Opening Ops Manuals – designed to transfer to the Franchisee the Franchisor’s ‘know-how’ related to the implementation of the business processes
- Franchisee Operations Manual – the day-to-day operations of the business
- Employee Manuals (Handbooks) – defining employee responsibilities, performance and expected operational standards.
Training
- Initial Training – introducing training in managing the business and implementing specific job functions needed for the smooth running of the business.
- Recurring Training – need to adjust performance of the franchisee’s unit to the changing business environment and to the franchisor’s requirements to stay in line with evolving franchisor requirements.
- Ad-hoc Training – to develop competencies in business situations where quick reaction is needed. Training on all should include all the main aspects of the business, must be comprehensive and give guidelines on staff recruitment, management, customer service and all legislative aspects.
To protect, lobby, promote and develop ethical franchising across all sectors in South Africa with specific focus on transformation.
