Franchising is more than just fast food and car dealerships. Emily Price, COO of the bfa looks at the key ingredients that make a franchise successful
If this is your first encounter with franchising, don’t think it’s all about fast food and car dealerships.
The franchise industry provides a fabulous growth mechanism for ambitious businesses and like-minded individuals. The opportunities span many markets and often require little to no background in the sector concerned. This, in itself, can provide a fabulous recipe for large scale shared success, so let’s take a look at the main ingredients:
A proven business model
Most franchisors operate a successful business in the first instance and simply use franchising as a secondary mechanism for growth. However, some are set up with franchising plans from inception.
Whether franchising was the original goal or not, all investors should be concerned with the proving of the business model. This means your investment releases all the intellectual property and support to allow you to replicate an already successful model.
The franchisor will have spent time stress testing and refining it, so any costly mistakes will have already been made. You can then build your business with the confidence that it has a high chance of succeeding.
A passionate investor eager to learn
The recruitment process for any franchise network is usually a rigorous one. Most investors are looking for a significant opportunity to see returns that align to their ambitions and at the very least want assurances that their investment will not be lost.
In the same regard, most franchisors will want the best possible investor to take the helm of their vacant territory or unit. One bad recruit could sacrifice the quality of the entire brand, so it’s not unusual to undergo numerous meetings and possibly even psychometric testing prior to having your purchase of the franchise accepted.
Strong training and support programmes
Training and support is the key to commercial success between franchisee and franchisor.
Franchising often provides an opportunity for people to own businesses in sectors they may not have any experience in. As long as attitude and commitment are aligned, most franchise operational processes can be trained.
We strongly recommend gaining a good understanding of the training and support programmes before signing any franchise agreements. Usually, the initial training costs are part of the initial fee, so bear this in mind when comparing the investment costs of brands you’re interested in.
A communication framework to support innovation
When it comes to franchising, creating a strong framework to support ongoing communication is critical to success, so ask what this may look like for areas such as support, ongoing updates, customer feedback and understanding the wider strategy.
One of the benefits of franchising is that, as a network of business owners, there’s a great opportunity to represent consumer feedback on a wide scale. If this is collated and reviewed in a positive way, with the intent to keep an eye on consumer expectations, franchising has the potential to obtain valuable data to make important research and development decisions.
Emily Price is chief operating officer at the British Franchise Association