What are the benefits of buying a ‘pilot’ franchise?

Louise Harris writes:

A business with a franchiseable set-up has several routes to market. The most common is to test or ‘pilot’ the business model. The parent business will form the basis of the operating standards, including operations, customer services, sales and marketing processes, but the pilot franchisee will stress test those processes in a new environment.

The pilot is formed to test proof of concept and enable the business to resolve teething problems before launching fully to the franchise market. The pilot franchise’s performance will also form the basis of the financial and business modelling for future franchisees.

A pilot franchisee will typically not pay a full - or any - franchise fee, although they will probably still have associated business costs such as premises, vehicles, equipment and marketing. They may also receive reduced management service fees or royalties and other benefits, which can make it a very attractive option for a more entrepreneurial franchisee.

The pilot franchisee will not follow a refined, structured model - which can be a challenge - but they can be part of developing the franchise offering and therefore part of the greater success. They will also be able to shape the future franchise model based on their feedback and performance.

Louise Harris is an experienced franchisor, having built and sold an award winning franchise. She’s currently franchise operations manager at Mathnasium UK.