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The Conundrum of Franchising

If you are thinking about franchising your business or have already franchised your business the information below could well be useful.

  • People believe franchising their business will enable them to grow and scale more easily, than going through the normal route of growth and expansion e.g. invest more money to increase capacity.  We know franchising works but there are a number of areas that need careful consideration, as outlined below:
    • Take on the right franchisees.  The most successful franchises out there have a process to filter out the franchisees they don’t want in their business.  This is really the same as a recruitment process.  Make sure they fit to your culture and values.  Check to see if they have a growth mind-set.  If they want a lifestyle business it can inhibit your growth potential, this mind-set can be difficult or nigh on impossible to change.
    • On the subject of control, make sure you are very clear within your contract what the expectations are for your franchisees.  It is a fine balance to attract the right franchisee as well as being attractive as a franchise business.  People generally want autonomy to run their franchise. Think about how you will manage that process. How prepared are you to relinquish control and allow them to run their franchise business?
    • Why would people pick your franchise above others?  Is your marketing, branding, core values and your why on your website? It’s really important to shine a light on these areas.  People want to know who you are, behind the business.  They will be wondering if they can trust you with their investment.  How will your marketing build that trust?
  • The challenge of the franchisor/franchisee relationship – this is a really difficult one.  Having worked as a business performance manager within franchising, this can be one of the biggest challenges.  There is often conflict in this relationship that stems from ownership of each business, the franchise and the franchisee.  When you own a business, it becomes your baby and you are emotionally attached to it, whether you are a franchisee, franchisor or an independent business. The franchisor sees their perspective and the franchisee sees their perspective.  My recommendation to minimise this is to have an open feedback culture from both sides on a regular basis.  Don’t let anything fester.  If there is any conflict, deal with it straight away by having an open and honest conversation. 

  • What are the alternatives to franchising?
    • I’m currently working with a care business who has tried franchising and it’s not worked out.  We are currently exploring implementing an employee owned trust, like a John Lewis Partnership.  This means that the business has full control who is hired and fired within the business, as well as being able to control performance. Employee Owned Trusts are becoming increasingly popular within the care sector.  The last time I looked there were 16 EOT’s within the top 50 EOT list.  The advantages are huge as everyone is invested and it can massively increase employee engagement. If you want to find out more on this then get in touch here.

Franchising can be a great route to expand your business. Hopefully the above will help clarify the areas you need to cover and steps you need to take to be successful. If you want to ask any questions then please give us a call on 01492 550401