I was introduced to Dr John P. Hayes when I met Michel E Gerber, so I knew he’d be an interesting subject when I interviewed him for my Franchise Radio Show. And John didn’t disappoint me. In fact I was so impressed with his published works that I give copies to all Franchise Simply clients and recommend they give a copy of ‘Take the fear out of franchising’ to all their prospective or new franchisees.
Over the years I’ve been involved in the franchise sector, I have seen some of the best and the worst on both sides—by the franchisor and by individual franchisees. The best have given us some of the most successful businesses and the worst, some of the most horrific, for everybody.
Unfortunately, it’s the worst that hits the press and recent negative publicity has created an environment of fear around franchising. But I know purchasing a franchised business is the safest and most successful way to enter business—provided both parties do their bit.
This means those considering purchase of a franchise have their share of the responsibility for making sure they will fit into the system. There are questions to ask, answers to get and there are evaluations to be made before proceeding. It is this research which will take the fear out of purchasing a franchised business and give you the best chance of success.
First understand the concept of franchising
Franchising is a simple concept. It’s a business growth model where a business owner (the franchisor) grants a licence (franchise agreement) to one or more franchisees to own and run replica businesses in another location.
It is a business. Your business. And although you will have assistance from your franchisor, you are responsible for making it happen and rolling with surprises when they eventuate and working within the brand to overcome them.
As a franchisee, this model gives you enormous benefits. You do not have to build a business from scratch. You will be given the brand, product, systems to follow, marketing and training. You will be helped to set up your business and provided with ongoing help in both business skills and the skills to provide your customers with the service or product brilliantly.
In return you will be responsible for running your business in accordance with the franchise systems. There are rules to follow and, as with every business, you and your staff have to put in the work to understand how your business functions and to get things done.
Not all of us suit this form of business. Not all of us have the skills or personality to fit into all business types. And not all franchised businesses are created equal, some will have the background to be more successful than others.
So do your research. Ask questions of your prospective franchisor, specialist advisors and yourself. Protect yourself.
Are you being offered something which has the best chance of success? And will you be a fit for that particular group?
Understand yourself and how you will fit into a franchised business
As Dr John P Hayes says, ‘Every franchise requires specific skills and values from franchisees. If you buy a franchise without possessing the specific skills and values shared by the top franchisees in that brand’s network, you’re walking yourself into a nightmare that won’t end for years!’
Ultimately it is your responsibility to know what these skills and values are because many franchisors can’t tell you.
The best franchisors will know and have documented the skills and values held by their top 10 to 25 franchisees but many can’t or won’t. So, ask for documents before you make the commitment to join the brand and if you don’t meet specified skills and values and cannot see yourself being able to learn them, then walk away. Because if you find yourself in a business you don’t have the skills or values to manage your only choices will be to hire suitably skilled staff or sell the business. Both avenues fraught with pain.
I always teach our franchisors to have a really clear idea of these three things about their franchisees.
What is the personality type needed for a franchisee to successfully supply the service or product to the franchise customer base? Is it drive and ambition? Is it chatty party sales? Is it empathy and support? Or is it careful detail and repetition? Usually it is a mix of a couple of these traits.
One crucial thing to think about is your need for control. In almost every situation, the franchisor will have control over what you can and can’t do. If this is difficult for you to consider then maybe a franchised business is not for you.
Franchised businesses have to be run in accordance with the systems and rules of the brand, legal agreement and operation manuals. Franchisees are most often involved with customer service and dealing with people in the most appropriate way for the brand is important. Having the values to deal with both your customers and your franchisor with openness and caring will take you a long way.
Some franchises require specific skills to manage. Bookkeeping, accountancy, legal practices could be some. Most however do not. Provided you have the attributes to run a cleaning business with the ability to take care of the detail, the skills to get the job done can be taught. Janine Allis always says she does not need people with particular skills as franchisees, just people with the attributes to look after her customers and get the job done. She can teach the rest.
The main thing here is to understand how your personality and values fit the skills you are going to have to learn. Will you have the patience to give the level of customer service required? Can you deal with the detail and doing the same job well time after time? Do you have the strength to firmly manage staff or will discipline be difficult? Can you do the cold calling required by the marketing plan to bring in new customers?
Finally, understand as much detail as you can about the group you are considering
Remember, you are not just going into a franchise to deliver the service or product of your choice. You will own the franchised business and it will be yours to make successful. Although the best franchisors will be aware that many of their new franchisees will need help in running their new business as well as getting the service tasks done.
The law protects you to a certain extent. Your prospective franchisors have to give you information and you have to be given copies of the Disclosure Documents and Legal Agreements. You will have access to other franchisees and the franchisor and their staff. So go through the documents with people you trust to give you the best advice.
Talk to other franchisees. Talk to your prospective franchisor. Then once you feel you understand exactly what is involved and you are happy to move forward, do so with excitement and enthusiasm.
Brian Keen has been involved in the franchise industry for more than 30 years and, today, is the Founder of Franchise Simply. His on-the-ground business experience as a multi-unit franchisee, franchisor and consultant helping many of the big names create their own franchise systems and growth over the years has been fed into Franchise Simply, helping today’s SMEs grow their business by franchising.