STRATEGIES FOR SUCCESSFUL FRANCHISING

As franchising is all about leveraging products, services and systems, it is imperative that your concept, products and systems have been thoroughly tested. Before you start franchising your business, you must be convinced that there is a need for your product, and that it works. In addition, you must be able to demonstrate that the business can operate profitably for a sustainable period and this is best achieved by first running a successful test model.

Operating a successful business is one thing, being able to duplicate the concept successfully is quite another. As your franchise expands, you will experience a certain ‘loss of control’ and it is advisable to provide franchisees with a detailed operating manual, brand guidelines and financial models they can refer to. In the area of brand guidelines, specifically, it is advisable to introduce clear parameters of operation; failure to give attention to this brand element could quite easily result in the dilution of your brand and/or the proliferation of unauthorized brand logos, products and services.

Appoint an attorney who understands franchising and ensure that all Master Franchise, Franchise Agreements and Disclosure Documents have been properly drafted. Where applicable it is also advisable to appoint experts to handle and lodge patent registrations.

If you are establishing a franchise in South Africa, you may want to consider consulting the Franchise Association of South Africa (FASA) to ensure that you have covered all the requirements for registering a franchise.

As your franchise expands it is imperative that you have access to the key numbers, both financial and non-financial, that will determine your success. Setting up appropriate accounting and software systems that allow you to track the performance of individual outlets, will afford you the opportunity to address areas of non-performance timeously.

One of the key, yet often overlooked, aspects of successful franchising is the support structures required to sustain a successful rollout programme.

As with any business, the success of your franchise will be dictated by the strength of the team you surround yourself with. Define the qualities you require in a franchisee and communicate this to all those involved in the candidate search.

Equally important is to define your franchise sales process. This will allow the prospect to make an informed decision about whether your opportunity is suited to their needs, and give you the confidence that the would-be franchisee has what it takes to be successful in your business.

Often, corporate executives want to leave their highly pressurized corporate roles, and whilst being successful in these roles, they might not have the personality, drive or tenacity to succeed as an entrepreneur. Whilst it is easier to succeed within a franchise model, it still takes hard work. If you want your franchise model to grow at the pace the market requires, ensure that you select franchisees who are absolutely committed to their own and your brand’s success.

Starting out in any business requires cash. There is a well-known saying that states, “At the start of your business, it takes twice as long and twice as much cash.”

This is certainly true when rolling out a franchise operation — product, brand and systems development, compiling manuals, designing IT systems and establishing head office support structures — is a cash-intensive exercise.

It is imperative that you develop a proper budget and cashflow model and to track your actual versus planned expenses on a monthly basis. This will allow you to take action timeously if needed.

Whereas driving product/brand awareness is the responsibility of the franchisor, local area marketing is the responsibility of the franchisee. This being said, one of the key reasons prospective business owners buy into a franchise, is their inability to do effective marketing and branding themselves. Therefore, in addition to developing a detailed marketing plan for the brand as a whole, the franchisor should provide franchisees with a marketing plan they can use to promote their business locally.

With the ever-evolving marketing environment it is the responsibility of the head office marketing team to ensure that the entire team is kept abreast of developments is this space.

At its core, franchising is all about relationships — while the franchisor/franchisee relationship is critical to the success of the brand, the relationships that these parties maintain with their customers and suppliers are equally important. It is therefore vital that appropriate communication structures are put into place to support the development of these relationships.

In conclusion, franchising is an exciting way to expand your business whilst not losing control of your brand or products — it can be a rewarding way to drive and achieve your financial goals if careful attention is given to the points identified herein.