THE MAGIC OF OWNER-OPERATORS

Even so, the decision to incorporate owner-operators into your business is not for the faint-hearted. Bringing third-party operators into a brand and business you have shed blood, sweat and tears to perfect and sustain, can be daunting. However, if the foundation is solid at the outset, it can be a rewarding and magical mechanism for the expansion or conversion of your business.

A franchise strategy is characterised by owner-operators with vested interest and accountability. While the model is typically associated with fast food, restaurant and retail concepts, the scope is much wider and certainly in South Africa there is enormous opportunity for its application across a wide array of business categories. South Africa is beginning to catch on to international trends and already we are seeing the mechanism (or its core principles) being applied to traditional wholesale businesses, both in business-to-business sectors and with the introduction of innovative ideas such as owner-driver schemes.

Start with the business concept itself; do you have a successful business already? You’d be surprised how many people with an ailing business consider franchising as a way out of their financial difficulties rather than as a way to get themselves (and others) deeper in the mire. 

Before you develop a pilot operation, you will need a workable concept and a proper business plan. A pilot operation is essential to test systems, marketing, supply chains, service, pricing, margins, seasonality and all sorts of other essential elements. Part of establishing a pilot operation is to establish what works and what doesn’t — this, after all, is what future franchisees will be paying for.

Franchising is not a golden bullet to success in business and in some cases it may just not be suitable. Ask your advisor to conduct a franchise feasibility assessment to determine if your business is franchiseable. A feasibility assessment will evaluate all the key components of your business to determine how/if a workable franchise that is scalable, replicable, profitable, viable and sustainable for the franchisor and franchisees alike, could be configured.

Once the feasibility assessment has been completed, an informed decision can be made on whether or not to proceed.

If the decision is to go ahead, it may then be necessary to remodel aspects of the pilot business so it can be configured into a ‘franchiseable’ business, and then to test and measure the changes to ensure they achieve the desired results. All this takes time, which is why, if done properly, franchising is not a quick process. The expansion plan phase also entails preparing a business plan for the franchisor and involves making key decisions on how the business system will be structured.

Once the business model has been properly developed and proven through the pilot operation, the next step is to prepare the various documents needed to establish, promote and run successful clones of your pilot operation in new locations. The documentation required is categorised as follows:

A franchise manual documents the systems and processes by which your franchise operates. A manual set may include franchisee and franchisor manuals, operating manuals, training manuals, health and safety manuals, and more. They form an integral part of the franchise system and a major part of the Intellectual Property (IP) the franchisee is going to use. As such, they are commonly referenced in your franchise agreement and must be returned to the franchisor at the termination of the agreement.

A franchise needs a brand that will encapsulate the business as well as marketing systems that will attract customers. Franchisees must have access to proper marketing material and clear guidelines on brand values and usage. The brand, logos and website addresses, in all their variations, all form a part of the new franchisor’s IP and should be registered and secured prior to franchising. Failure to provide these may lead to you losing control of your brand.

Building a franchise system is one thing; attracting, informing, evaluating and appointing suitable franchisees is another. This will require advertising in a variety of media, the creation of information packs and, for serious prospects, the preparation of a comprehensive and detailed Disclosure Document.

As this is the document that governs the ongoing relationship between the franchisor and franchisee, it is vital that the agreement is properly developed for your specific business and that it is not just a ‘cut-and-paste-job’ from other agreements. Your consultant should develop a proper brief for your lawyer that sets out the main elements of the financial and operational relationship, etc.

These days, documentation isn’t just about documents —­ it covers digital and online systems too. One of the advantages of a franchise should be that it allows franchisees to benchmark their performance against others, and franchisors to spot areas where the right support or training can maximise potential. Building in the system to achieve this is easier to do at the outset, rather than trying to retrofit at a later stage. Take your consultant’s advice regarding data gathering and data sharing point-of-sale (POS) systems, online accounting with common coding, and suitable communications tools.

A subscription-based Internet software solution such as Franchise Infinity can provide the structure and disciplines you require for managing the franchise. Franchise Infinity was designed to bring together all these aspects into a single tool, enabling everyone to access the information they need without changing platforms or reinventing the wheel. The latest release is making this a reality here in South Africa.

The outcome of the documentation process is a ‘business–in-a-box’ with all the documentation, training and systems in place for new franchisees to develop a successful business under the franchise brand. 

Franchise management is a complex process with compliance, performance, support and management issues all overlapping. As a new franchisor who is still learning the diverse skills of leadership, support and compliance management, you will be sporting learner licence plates for some time yet.

Your consultant, accountant and lawyer will form your professional support team and it’s worth developing a relationship with a specialist franchise banker, too. Develop a peer group of other franchisors by attending franchise conferences, seminars and networking events — fellow franchisors who have experienced the opportunities and issues you face will often share their experiences freely.

Scaling the challenges of building a franchise is best accomplished by working with advisors who have navigated the path before. Build on solid foundations with the right architects and franchising has the potential to leverage your business from one to many, with an army of accountable, hands-on operators in each tactical unit. It can be a great journey, building a national brand with international potential while enjoying the support of a network of committed owner-operators that sustain families and communities.