Category Archives: Franchising Business Practice

Family Franchise Businesses

More and more the trend nowadays is for a family to come together to make a business work.

Through a survey I did towards the end of 2009  – I’ve found that the growing trend is that people are pushed out of employment and into self-employment for a variety of reasons. Some of these are:

1) Dissatisfaction with the quality of management within their current job

2) No incentive provided in the workplace for any initiative or true involvement in the business (in fact any ideas are squashed before they are even heard), and most of all…

3) No real financial reward (vs the time and effort put into the job) that matches expectation (this includes time in lieu of many hours of overtime above and beyond the call of duty).

So, what does this mean? Well, you will probably be so unhappy that your family around you may well say ‘Hey, why don’t we just do something for ourselves?’. This is why franchising then becomes an attractive idea – because:

  • There is a lower risk at start-up (especially with established franchise models with proven statistics and performance from current franchisees)
  • Any money invested upfront is going towards business support, set-up etc – and this has all been worked out for you
  • Working with people you know and trust (your family) helps to eliminate the worry of employing unreliable staff

Now, of course, we could have a whole discussion on the dangers of going into business with family – but there are more than enough families out there making a go of it than you think!

The top tips for making a family run franchise business work?

  • Everyone needs to have their own roles very clear from the outset
  • Someone is elected as the Boss (end of story)
  • Someone is elected as the Organised One (every business needs one of these) – to whom everyone needs to listen to in order to be efficient and cost effective
  • Someone is elected as the Finance Person (every business needs one of these – this maybe outside of the business)
  • Everyone needs to be earning a salary (or at least agree what that WILL be in the future…give a date…if there is a consensus to hold off for the first few months)
  • A Team meeting needs to happen at least every two weeks to have a talk around the table to clear any issues, or PAT anyone on the back for a job well done

Respect who you are working with and they will respect you – this goes DOUBLE for family run businesses. Mom, Dad, Daughter, Son, Aunty, Uncle….those titles are not relevant during the work day.

Have you had any experiences working in family-run business? Please do let me know about it in the comments box below! I want to hear good and bad stories!

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Franchise Agreements: Negotiable or Not?

I have just seen a conversation on Linkedin about the subject of being able to negotiate on Franchise Agreements.

I am of the strong opinion that in the UK, these agreements are not up for negotiation because if the model has been put together ethically and profitably for both parties in the first place there should be no need for negotiation. In my humble opinion it would indicate a weak system and/or franchisor if he/she did negotiate the terms – all franchisees should be on the same terms and be subject to the same compliance issues, advantages, etc. (Of course there are some models that have to have an exception to this – especially mixed models.)

Of course the law is different in other countries (and even in states in the USA) and sometimes the option is not even available. What I do like is that if an agreement is altered for one franchisee – it is made public and everyone will know about it. Unless I have misunderstood that point?

What do you think? I would be interested to know.

Strategic Partnership Choices

This is a really crucial subject that many business owners don’t look at hard enough when they are mapping out their business models.

I am a firm believer in businesses keeping their focus on what they are good at delivering, however I also believe that they should be grabbing viable opportunities when they arise.

This means that if there is something that your clients are asking for time and again, and your standard response has been “We don’t do that” – please realise that you are losing out on income every time you say that! (Or worse…pushing clients towards your competitors.)

So, what is the solution?

Forge some solid strategic partnerships and ‘white label’ them. What does that mean? Well, you engage businesses as ‘partners’ for all intents and practical purposes and they deliver what you need them to – but under your name.

What is the catch?

You need to be careful in your strategic partner choices. My top tips in securing long term, sustainable partners are as follows:

1. Interview them as you would a valuable employee
Remember that they will be the ‘face’ of your business – so there is a definite need to ensure that the partner business shares your values and has the same ethical business practises as you do.

2. Get References
Don’t take the prospective partner’s word for it that they are ‘fabulous’ – get some examples of their work and speak to their clients. The proof, as they say, is in the pudding.

3. Don’t jump at the first attractive proposition
I always ‘watch the waters’ for a while and see if the partner business remains consistent in their communication and that their reputation in the connected business circle ‘rings true’. The partnership must be lucrative for both parties – so make sure its attractive for you and the partner. Anything that is profitably unbalanced is fishy!

4. Have a trial period to test the relationship
As with a new employee – make sure you build in a probation or trial period, where you and the partner can work out if this is a partnership that will be lucrative and sustainable for both of you. You will also need the time to work out any ‘kinks’ – because you don’t know how anything will work out practically.

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Develop a Standalone Business Model

With my background in franchising, it’s quite natural for me to look at just about every business and wonder what the ‘model’ is behind it. What I mean by this is – what do the cogs look like; what do they do and what results do they generate. I have to look at businesses in a structural way, because that is why franchising is a successful growth or exit model: it’s about finding a winning formula, sticking to it and repeating it over and over.

A trap that most business owners fall into very early on is in trying to do everything themselves for one of two reasons: 1. fear of losing control or 2. not trusting that anyone else can do the job properly. The biggest learning for a business owner to latch on to is to build a business that does not depend on him/her.

Even if you have not franchised your business, you should be following the principles – starting with removing yourself from your business. This is your first step to creating a Standalone Business Model.

Do you want to be frazzled for most of your business life because you can’t walk away for a few weeks? No? Then ask yourself some of these questions which will help you to make a good start to identifying what you can automate in your business:

What are you doing right now that can be delegated?

Make a list of what you do today – everything, down to filing, reading emails, opening post, stamping something etc. Bear in mind processing of enquiries, sales meetings, staff management etc. This will lead you on to the next question…

How much of your business is outsourced right now?

You may already have done an exercise this year to see what you could streamline and where you could save on overheads and staff time. If you have – make a list of what these things were and also look at what you have experienced since actually outsourcing those things (benefits/payoffs). What else are you doing that could be outsourced?

What do you do every day that is repetitive behaviour?

The way to find out what works and what doesn’t is to look at which actions or activities bear which fruits. So, what are you doing that actually doesn’t contribute anything directly to your bottom line? How can you change this and create an action or activity that turns it around and does add to your bottom line?

You may also have certain activities that you HAVE to do, which DO bring in direct business and/or sales – and these need to be repeated and actioned more! This will form a part of working out what your winning formula is.

What are you doing in one area of your business that you can easily replicate elsewhere?

You have some areas in your business that are running really well and very smoothly. Ask yourself what you are doing right in those areas and find a way to replicate the process or structure that you are using there on another area.

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If you can answer these questions in your business, you will be ahead of the game in formulating what business model you are working with and be in a better position to establish how to develop it to be less dependent on you…even if you have to put some things in place that will only create a Standalone Model in a year’s time.

Be smart. Review your model frequently to ensure business longevity and more importantly…your sanity.

Ethical vs Legal Business Operation

There is a little ‘legal’ restructuring mechanism that has become the toast of ‘good strategic advice’ to businesses of late. A relatively mysterious process called ‘Administration’.

I have to admit complete ignorance in the past about the full meaning of the term, as well as what it means in practice. Perhaps you may have too – but seeing that I have come across this ‘term’ at least 7 times in a period of 4 months – I have decided that I really do need to talk about it!

As an advocate of ethical business and ethical franchise modelling, I am in awe that this business strategy is one that many, many business owners have turned to as a way to ‘get out of hot water’. I realise that there are so many challenges today in running and operating a business, much less surviving tougher economic climes, but I am horrified in this new trend. I almost feel as depressed as when I hear about the increasing divorce rate in the world. My question of ‘why get married in the first place’ can be asked too of business owners who have failed to manage their businesses well  and how they are being rewarded with this easy way out to clear their decks.

In layman terms: ‘Administration’ is a method whereby if you find your business in a tough place of not being profitable and not being able to pay your creditors (although not quite at the bankruptcy stage) – you can turn to professional ‘business recovery specialists’ who will guide you through a path of taking you neatly out of the hot water…and then ‘protecting you’ from your creditors and employees asking for money from you. And then, as a cherry on top, give you the opportunity to open your doors again the next day – doing the same business, but under a different name. (Can you feel the emotion behind my words here?)

The consequences:

  • A huge backlash on small business who lose clients and are lumbered with bad debt (i.e. they are the creditors who have been dedicated to providing the products and services to help the business owner do his business)
  • The employees who have worked hard to help the business owner keep his business going and thriving in the past – don’t get their salaries, get no real notice and get very little in compensation
  • The business owner actually has to ‘start all over again’ because no-one wants to touch him or his business because of how he let them down

So, I guess my message to the business owner who is considering this path of ‘recovery’ is to use a healthy balance of good business sense and being compassionate to the parties involved. I realise that sometimes business owners have to take drastic measures to save their businesses, but my only wish is that they engage their employees in the move and be more empathetic to the impact it has on them and the creditors too.

I may be naive, but I do think that great business leaders consider every one of their actions before they take them and step forwards in the best way to lead others carefully to the other side of troublesome situations.

Marketing the Franchise Proposition

This is one of the main elements that need to be planned out along with the main strategic bits when embarking on franchising your business. The actual franchisee model will dictate a little of how the proposition will be marketed and to whom. What do I mean by this? Well…your marketing plan will consist of two parts:

(a) Brand positioning

This is where you are clear about where your position is in relation to the competition, and what the target customer looks like for the physical service or product that is provided as part of the model (i.e. these are the franchisee’s prospective customers). Why do you have to focus on this? Because this is how the brand will be identified as a whole in the market place and is how you will initially attract any interested prospective franchisees.

As a start-up franchisor: your marketing plan should include the following:

  • a pre-phase 1 step of brand pushing (i.e. before you even start to try and recruit franchisees, take a few months to do some real brand awareness about your service/product, the reputation of the brand..and educate your marketplace about your business. I would advise a minimum of 6 months in staggered proportions in various media.)
  • a preliminary step in marketing to the people that already know about your business (so this may be your current business contacts, client base etc)..and let them know that you have created a fantastic business opportunity and are looking for interested parties

(b) Targetted franchisee recruitment

This is integrated into the above  (even for an existing franchisor) although there needs to be more of a focus on what your message is in your recruitment campaign regarding the business opportunity. My biggest advice on this score is to have a staged plan of recruitment advertising and marketing, leading up to an opportunity for any interested enquirers to come and see you either at a Discovery Day or personally. Interviewing takes up a lot of time, and shouldn’t be rushed, so my advice here would be:

  • Carefully profile your perfect franchisee (in terms of  their identifiable skill set, character and ‘drivers’), so you can easily identify them when they are talking to you
  • Create an enquiry process that makes it easy for prospects to get in touch, but also gives you the opportunity to reduce the time wasters and the mystery shoppers
  • Have a fabulous, eye-catching and attention-grabbing prospectus

By perhaps using a few dates to hold Discovery Days, it will give your sales team some clear time goals to get the prospects in by a certain date and you can plan your recruitment enquiry influx better. Discovery Days are opportunities for people to come and hear a presentation from the franchisor about the franchise proposition and what it can offer them. Make the day interesting and perhaps build in a viable FREEBIE…that will be useful for them when they walk away, like a tool that can be used again, even if they don’t go with your opportunity. You will be remembered forever.

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Marketing is such a touch and go scenario, because of its subjective nature, but if you are responsive and listen really well to the feedback you receive (or don’t receive), you are already a step ahead. Here are some of my top tips which may help you cope:

1. Don’t be too proud to outsource for help

It is easy enough to outsource the preliminary enquiry processes – but make sure they are professional providers and a great ‘face’ for your business. First contact is very important!

2. Only stick with the advertising routes that work

It is expensive to advertise, so make sure you weigh up the payoffs with the cost of the route you choose. Do not continue to advertise in top broadsheets (national papers) when you don’t actually, physically get any response from them! (When you are big enough and able to…then advertising in these papers are more for brand awareness than recruitment.)

3. Think outside the box to find your prospects

Consider the options of looking at Vetfran (ex-military), disability organisations (as long as the disability isn’t a hinderance to operating the franchise), minority group associations (women, ethnic groups etc) and other kinds of organisations that have a ‘listening’ of individuals who are actively looking for alternatives to employment and want to start their own businesses.

4. Plan how you are going to manage filtering people through your application process

Always plan for best case scenario – so plan that 10 franchisees are going to signup in one month and ensure that your resource framework can handle this. If there is one time in a franchisee’s life you don’t want to mess up – its in inducting and welcoming them into your network. Make sure you have the support and training in place, so that all you need to do is ‘flip a switch’ and your systems swing into play. Smooth running is what you MUST aim for. People who don’t ‘make the cut’ need to be handled expertly and professionally…so that they are left with a great impression of how you deal with people as a business. (You never know – they may refer someone to you!)

5. Enjoy the growth and sharing your business with others

Although recruitment can be hard work, enjoy this time of sharing your business model with others, but also make sure you protect yourself in terms of how much you share at each point in your marketing and recruitment. Your adverts and marketing message in terms of the franchise proposition aimed at prospective franchisees must be ethical and wholesome, but attractive and competitive at the same time. Your enthusiasm, passion, pilot evidence and prospectus will be your main selling tools in the beginning – so use them wisely and don’t over promise (a trap you may fall into).

Multi-Unit Franchise Purchase the Way Forward?

I’m sure those of you who watch the market closely will agree that the days of single purchase franchises seem to becoming a thing of the past.

Franchisors are planning their growth patterns along the lines of recruiting viable franchisees who will be able and capable to own and manage multiple units. Now, this sometimes means, like in the case of Dominoes and Costa Coffee, that the franchisee will own more than one restaurant (sometimes as many as 4 to 5); but with other multi-service franchise groups…the franchisee may own a variety of the brands under the franchisor banner…for example with Service Master: a franchisee may run a Merry Maids (domestic cleaning) operation alongside a Trugreen (lawn care) one.

Now, the only issue I have with this, on an ethical franchising note – is that I would really hope that these individuals are given all the support, training and guidance that they would need to not only manage one unit…but a small growing empire. I have heard of franchisors who will gladly ‘sell’ multi-units, but don’t really have the resources to help the franchisee manage what it all means in practicallity.

Within my planning sessions with prospective franchisors I will always work a ‘career path’ into the franchise model with them. With a keen eye on the phases of a franchisee life cycle…I educate the franchisor on how the franchisee’s interest will evolve over time – so that they can ensure that they retain the franchisee and don’t end up spending more money having to terminate or recruit new franchisees.This includes building in the option for further unit purchases or having different levels of franchise ownership (in terms of staffing, vans, areas etc)..which a franchisee can progress to (after proving capability over time).

My stand has always been to recruit wisely and with care….because you are in essence choosing ‘family’. These franchisees will be with you for the next five to ten years, a relationship that will not be easy to get out of when you find out that you didn’t carry out your due diligence during your application process.

I think multi-unit ownership is great, but it must be undertaken with due caution and consideration – from both the franchisor and franchisee’s perspectives.