As An Experience Franchisee You Know Everything About Franchising – Right?

Just lately I have had a couple of franchisees with experience in different brands coming to me saying they are considering buying the rights to become the Australian franchisor or setting up their own franchise group.

Invariably, the people concerned say they know everything about franchising and that they just want help with setting up their systems. The rest is in the bag, and they see no problems in the future.

The problem with this is – franchisees don’t know what they don’t know and so don’t have any idea of the questions to ask. Their considerable and very valuable experience in the field gives a false sense of security…

So, I ask questions of my own – hoping to make the transition from franchisee to highly legislated franchisor simpler and less chaotic.

What are a franchisor’s responsibilities?

The response to this question is generally, ‘To give the franchisee support’.

But when I push, there’s not really any understanding about what this means. Yes, product training but there is not much understanding of the rest.

A franchisor is responsible for making the group work. Understanding:

What it is you provide your customers and what they need, the market, the kind of people who will be good at delivering the product to that market and their frailties.

Marketing needed to make sure there is enough traffic to sustain the group.

All the legislation that sits around business and especially franchised business in Australia and how this is going to be covered – business structures, insurances, staff management, franchisee management (yes, it’s different to staff management – you are dealing with business partners, albeit partners who have to work within the rules set out in the agreement) and much more.

The support a franchisee is going to need to get the job done. Yes, the training at induction and ongoing, help with business and staff. These are things that make a franchise work – relationship building, making sure everyone is doing things the franchise way which means visits to check, holding events to pull people together, holding people to account when things go wrong, it’s not all fun.

How the money works. How much does it cost to run the franchisor side of the business? How much does each franchisee need to turnover to give themselves a fair profit and still pay their own costs and the franchisor for all their help plus their royalties.

This list is long, and franchisors need to be very experienced in everything about business and managing people to succeed. It’s no accident that Tom Potter who established Eagle Boys Pizza described his move to franchising as,

‘I’ve moved from the pizza business to the people business’.

All these responsibilities are associated with a suite of details around each particular trade or product.

What kind of person is your perfect franchisee?

Most of these details generally sit around the characteristics of the people you need to deliver your product – your franchisees.

Are you setting up a full-service restaurant franchise and need franchisees with the ability to manage the food, service, staff, money, ordering and more? These guys need to have the drive and personal strength to handle busy, detailed business tasks and sometimes difficult staffing or logistics circumstances with ease.

Or are you setting up a massage therapy business and know your massage therapists need to be empathetic people, able to build caring relationships with your customers. Experience tells me this group will not have the personality to deal with the more practical and direct side of business such as cold call marketing or making sure the bookkeeping is up to date.

So, when pulling together the way your franchisor business is structured you need to look at the likely personality of your best franchisees, the ones who will succeed in pulling in customers and looking after them well and ask,

‘Will they need help and if so, what will this likely be?’

Local Area Marketing and sales

Most modern franchises we see handle nearly all the marketing at the franchisor level. Certainly, generating leads is held at this level because this is mostly digital these days. Websites, social media, marketing methods such as AdWords are all best done centrally, funded by a Marketing Fund made up of contributions from both franchisor and franchisee.

Most franchisees then do very little in the way of Local Area Marketing. Maybe local events work for some sectors.

The dividing line is sales.

Real Estate Agents and the restaurateur previously discussed will need to be completely capable of making the sale.

A massage therapist not so much. The franchisor will need to manage sales and simply provide the customer details so the therapist can deliver the product.

Trades people however, are often great at converting the sale. When they visit to check the quote, their expertise is on show and provided they have training, they naturally give the confidence that they can do the job.

Business tasks

Most business tasks today have been digitised. Bookkeeping has been simplified with the likes of Xero and sophisticated POS systems and in many cases, this means the franchisor can take most of these tasks away very easily.

Staff management

Franchisors need to understand that Fair Work legislation means they need to take care that franchisees are managing staff within the legislation. The Fair Work website is clear on what is needed so make sure you get expert advice.

Anything else

Each business is different, so think it through. What will you, as franchisor need to do to help your franchisees:

• Deliver the best product or service to your customers
• Become the best business people within their trade
• Can pay their way within the group
• And become profitable and happy members of the team

And can you be the best franchisor you can be leading your group to success?

Having had experience as a franchisee, you are in the best position to be a fantastic franchisor, supporting your franchisees to success.

Just make sure you get as much information as you can about the franchisor’s role before you take the plunge.

The combination will give you a firm footing to move forwards.