It’s true that franchising is an attractive business model for anyone willing to invest in a business and that franchises reduce the risk of failure. A franchise business is far more likely to grow and thrive with all the tools, processes and support the franchisor has to offer. And a good Franchisor/Franchisee relationship is likely to help you grow a fruitful business.
On the surface, it seems like a ready to go scenario; invest, get trained, and off you go; ready for success and return on investment.
In principle, yes, but regardless of the foundations already laid by the franchisor. There are a lot of responsibilities for both the franchisor and the franchisee if the relationship is to be a success.
While the franchisor is providing a structure for the franchisee to follow, it is the franchisee’s responsibility to grow their business. It’s the attitude, motivation and efforts of the franchisee that will eventually determine their success.
Dissatisfaction often arises due to inadequate communication and unmet expectations. But if all parties do their part, it can lead to a fruitful and long-lasting relationship.
So let’s take a look at our top tips for a successful Franchisor/Franchisee relationship:
1. Research, research, research
The franchise recruitment process is a two-way street. Each franchisor and prospective franchisee will each assess the other.
The franchisor will assess the potential success of the application by reviewing their background on a personal and financial level. Often the franchisor will arrange many meetings and discussions before an applicant is approved to become the next franchisee.
Hence, a prospective franchisee will research on two levels:
The business opportunity itself:
- Review the Information Memorandum carefully and ask any questions you may have about the business itself. The franchisor and the broker should be transparent about the business.
- First impressions count! Visit the business, go on site. What’s your first impression? Is it clean, in order? Are you well received and welcomed?
- Talk to your advisers such as a lawyer, a business consultant or anyone that can help you have a more pragmatic approach.
- Talk to existing franchise owners to get their perspective. (Read more about what questions to ask here).
- Check if you can easily find the business on Google.
To help you assess a possible business opportunity, we have put together a Free Comprehensive Due Diligence Checklist. You can download it here.
The franchisor:
- These days, you can find a lot online, so spend some time researching. While the franchisor will provide you with a lot of information, you must do some research online. Check the franchisor’s websites and any other relevant information, such as press releases and media coverage. It’s important to look for both positive and negative information about the company.
- Contact the franchisor to fill-in an expression of interest to start the recruitment process journey. Pay attention to all materials provided and be attentive to how the franchisor handles this process; this will give you a good understanding of head office communication.
- When starting a franchise business, training is critical. Make sure to ask the question about the training. How long does it last, its there is onsite training? Etc.
- On top of the business price, you need a clear understanding of all additional costs associated with the purchase of a franchised business such as franchisor fees, royalties, marketing/advertising fees and other ongoing fees.
- Ask about the level of support offered by head office to franchisees.
- Once you advance into the recruitment process, you will have the opportunity to review the Franchise agreement and Disclosure Documentation. These are critical documents that you need to study A disclosure document is an open book to the franchisor’s current situation and set out all aspects of the franchisor/franchisee relationship.
If you want to know more about what to look for in a disclosure document, we recommend you read the following article: link here
2. Transparent and efficient communication Franchisor/Franchisee relationship
Open and transparent communication is the key to all good franchisee/franchisor relationships. Therefore, communication channels should be in place to encourage the franchisor and franchisees to share ideas, provide feedback, have a collaborative approach and discuss best practices.
The franchisor will often communicate via newsletters, internal portals, meetings, webinars, and seminars, where all franchisees will be encouraged to provide feedback.
Often great ideas come from franchisees themselves who are the ones using the tools provided by the franchisor on a daily basis. Franchisees are better positioned to provide constructive feedback on what is working well or not so well and provide improvement suggestions.
While relationships deteriorate without consistent, authentic and truthful communication; franchisor/franchisee communication is no different.
3. Tools for success
A competitive advantage not only comes from the brand but also in the tools the franchisor has designed to help franchisees work more efficiently. You must consider things like:
- Initial training provided (including training manuals and support documentation).
- Ongoing training.
- Sales/customer management software.
- Preferred pricing from the approved supplier network.
- HR and staff hiring support; will the franchisor help you recruit the best candidates?
- Access to national and local marketing campaigns and materials.
4. Taking Responsibility
Franchisor/Franchisee relationship is also based on their respective responsibilities, it is best to understand them from the get-go.
The franchisor is responsible for:
- Providing franchisees with the tools, systems, materials, support, training and recommendations to succeed.
- Watching and adapting to new technology, trends, customer satisfaction, products and services.
- Being consistent and treating all franchisees equally.
- Ensuring the integrity of the system and the territories the franchisee might operate in.
- Maintaining a high level of quality standards across the system.
The franchisee is responsible for:
- Following the systems and training.
- Being responsible for their staff.
- Setting their pricing (with franchisor recommendations).
- Reporting of sales to the franchisor.
- Participating in national and local marketing campaigns.
- Maintaining high product/service quality standards.
5. Following the plan
With years of experience and field testing with franchisees, specific systems and procedures have been put in place to build a successful business model. Franchisees can’t be expected to reinvite the wheel.
The franchisor is investing a significant amount of money in building brand awareness, communicating with the target audience and offering high quality products/services. The franchisor will ensure that all franchisees are meeting those standards and adhere to them.
When a franchisee follows the system and procedures correctly, there is an excellent chance of managing a successful franchise business.
Why not tell us more about your current situation and where you want to be. Our experts can help you identify if Kwik Kopy is right for you, your budget and your aspirations.
Reach out to Peter Fiasco on 02 9967 5500 or by email on franchise@kwikkopy.com.au.
