Franchise advice
"Build a strong team to support you, and know that there is plenty of support available"
consumer awareness of your brand, the success of the pilot operation, the financial return, the lifestyle and enjoyment of running the operation, and the strength of the management team.
Market trends and conditions Market analysis acts as a general indicator of potential success for you and the franchisee, and should be used to refine your long- term plans. It is important that the market for your products or services is viable in the medium to long term. Is the market growing or consolidating, and how will that affect your business in the future? What are your franchised and non-franchised competitors doing? Are you likely to be able to find a buyer for your franchise network when you decide to move on?
Successful pilot operations You can’t franchise an idea. An initial pilot operation is necessary to demonstrate that the business is viable. It will also act as a testing ground for your new products and services, marketing techniques, merchandising, and operational strategies in the long term.
Transferability of knowledge
It must be relatively straightforward to teach a franchisee how to operate a replica of your
business. You must also be able to provide the training in a reasonably short period of time. If your business is complex, you may find that your recruitment will be restricted to prospective franchisees that are already experienced in your field, thus reducing the marketability of your proposition.
Documented systems All successful businesses have systems, and in franchising these must be documented and communicated effectively to your franchisees. Your company policies, procedures, systems, forms and business practices should be presented in a comprehensive and user-friendly operations manual, which is provided to franchisees as part of their franchise package.
Affordability and return on investment A franchised business must be affordable to its prospective franchisees, as well as being profitable for the franchisor and the franchisee. Also, once the fees have been paid to the franchisor, the franchise must provide enough profit for the franchisees to earn an adequate return on their investment (of both time and money). This profitability is relative and should be measured against the investment to provide a meaningful figure, with franchisees achieving a proper return on investment by the third year of trading.
Commitment Successful franchisors are committed to building long-term, mutually rewarding relationships with their franchisees. There is a strong link between the strength of these
relationships and the profitability of the franchise. Strong franchisee relationships enable the franchisor to sell their franchises more effectively, introduce necessary changes into the system more easily and motivate franchisees to provide consistent customer service.
Strength of management The most common contributors to the failure of startup franchisors are understaffing and a lack of experience at the management level. New franchisors often try to do everything themselves, taking on roles where they have little or no experience. Consider how you will cope with the resource demands the franchise will bring, such as marketing, lead handling, sales, training and multi-operations management. Build a strong team to support you, and know that there is plenty of support available, including with Ashtons Franchise Consulting.
Capital Franchising is a relatively low-cost means of expanding a business but it is certainly not a no-cost option. A franchisor needs capital and resources to implement a franchise development programme and to recruit franchisees. There should also be adequate finance available to support the growing franchise network, especially in the early years. l
Nick Williams Managing consultant at Ashtons Franchising Consulting
www.ashtonsfranchise.com
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