EXPERTADVICE
How do I ensure that my franchisees stick with the business, and choose to renew their franchise agreement?
ROZ GOLDSTEIN Roz Goldstein is founder of Goldstein Legal
Launching a franchise business is one thing; holding on to your franchisees as you grow is a different challenge. In my experience, the top things that will set you ahead of the game are: • ‘Fail to plan – plan to fail’. Your franchisees need to be making money, and – to put it plainly – their profi ts need to be in line with their expectations. There is no substitute for including thorough and cautious cashfl ow forecasts in your franchise recruitment pack. Tempting though it is, over-selling your opportunity gives you short- term gain, but long-term pain.
• Prepare your franchisee selection criteria with a fi rm and cool head, and then stick to them.
What happens when a franchisee doesn’t meet expectations?
The performance of your franchisees is critical to the success of your franchise. As with any business it is important that franchisors monitor Key Performance Indicators (KPIs). Monitoring KPIs will enable you to highlight areas requiring improvement and provide a foundation for development.
Given that the performance of your franchisees is critical to the success of your business, why is it that so many franchisors
JULIE TAYLOR Julie Taylor is managing director at Franchise Resales
As obvious as that sounds, we all know how tempting it is to compromise for the sake of hitting recruitment targets. If your franchisee wasn’t quite the right person at the start, they are unlikely to change.
• Branding is everything. People invest in, and stay in, franchise systems that have strong brand recognition. Investing in proper trademark protection and having a budget for PR and brand management is key. • Build valuable ongoing support into your franchise proposition so that your franchisees need your ongoing input. This can be, for example, in the form of a competitive supply chain, supply of customer leads, and IT and systems.
Focussing on these four issues will substantially help you to build a long-term successful franchise network.
have diffi culty in taking remedial action? Particularly when the solution can be as simple as arranging some training!
A franchisee whose performance is ‘okay’ and who feels they are meeting targets, but are actually not meeting your expectations, will not help your business grow. Before you take action be sure that you have made your expectations crystal clear. It may simply be a failure to understand your expectations. Eventually, if their performance does not
improve, it may be that you should consider managing them out of the business. The process of changing franchisees can be challenging, but from it you will gain the infl ow of fresh ideas, enthusiasm and drive that invariably accompanies a new franchisee. n
If you would like to ask our experts a question please email
fnews@vmgl.com Franchisor News | 17
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