Franchise System Development
FRANCHISE SYSTEM DEVELOPMENT
Franchise business system evaluation and strategic participation through a process of possible franchisee trade unit format re-engineering, network expansion strategy development, documentation and packaged elements aligned to the prescription of the Consumer Protection Act.
As much as the success of any franchisee depends on his or her own ability to effectively operate and manage all aspects of the business, the health of the business system as a collective and reputation of the brand will always override the ability of the operator. In order for SA Franchise Warehouse to deliver on its core mandate, being sustainable franchisees, the accurate assessment of and/or participation in the development of sustainable brands is an undisputed departure point.
SA Franchise Warehouse is geared to to contribute to the franchisor’s business system, represented by the brand, in support of its franchisee network.
The industry, nature and the maturity of the franchised (or to be franchised) business model will dictate the level and cost of SAFW’s involvement as far as the business system development process goes.
Where the intended franchised business model is already in operation for a reasonable amount of time and in the same format as intended to be franchised, with reference to brand identity, market demographic, operational footprint, set-up cost, overhead structure and projected turnover, SAFW will have limited contribution to the optimisation of the business model and can documentation drafting and packaging commence.
In case where the business model requires identity development, process re-engineering, system adjustment or piloting, the consulting role of SAFW may be extended.
Without labouring the detail, the following elements are generally considered through the process and will be forming part of the consultation agenda once the business model already exists in a replicable format.
- Definition and description of the franchisee business model and possible alternative formats with reference to the customer value proposition, target market definition, franchisee resource requirement and operational boundaries
- Modeling franchisee set-up costs and projected profitability, preferably based on information gathered from the pilot or existing operations
- Drafting of contents of franchise Disclosure Document as required by the Consumer Protection Act
- Drafting of a franchise agreement as required by the Consumer Protection Act, which is outsourced to a specialist franchise attorney
- Compilation of a public franchise prospectus
- Design and setup of the “Franchise Opportunity” portal on the website of the brand
- Implementation of the RecruitEx solution for lead management and franchisee assessment and profiling
- Implementation of a Franchisor Information Management System (Symphony). The actual monthly subscription cost and cost of possible custom development is excluded in SAFW’s fee described below.
- Administration of all franchisee related information
- Franchisee document library
- Franchisee establishment project management
- Franchisee and staff training management and evidence hosting
- Franchisee ongoing standards and compliance monitoring, ie field visits, mystery client reporting, complaint management, communications portal, etc
- Franchisee accounting platform. This is not the franchisee’s point of sale but includes the general ledger being maintained from the cashbook and the daily reconciliation of sales to cash banked taken into account expenses paid in cash.
- Compilation of business system operations manual covering all operational and management disciplines pertaining to the establishment and the operating of the individual franchised business. There is a myriad of policy, process and control procedure hosted in this document.
- Consultation on best practice relating to key franchise management disciplines such as -
- Franchisee profiling and recruitment
- Franchisee relationship management and forum establishment
- Franchisee support strategies and standards monitoring
- Royalty determination
- Franchisee dispute resolution
- Franchisee procurement policies
- Franchisee reporting obligations and approach
- National and local marketing policies
- Franchisor contractual obligations
- Network growth strategy
- Facilitation of FASA membership application. Actual registration cost not included.
The actual cost associated to the entire development process will depend on the level of involvement but will be between R150 000,00, where the identity and final business model exists to R250 000,00 in instances where development and piloting is required.
Where the franchisor require Symphony to be implemented as primary management information and franchisee accounting platform, an additional R60 000,00 will be added to the cost.