How To Achieve The Basic And Most Obvious Goal Of A Franchise: To Make The Relationship Beneficial To Both The Franchiser And The Franchisee.
Franchising can be likened to having a car after a trip to the car dealer. Once we are done with choosing a franchise or deciding to franchise our business, we would need to address this crucial question: in the same way that we need to get the car out of the dealer’s premises after paying for it, in the same way, that we need to get the car out of the dealer’s premises after paying for it, how do we make the franchise work once it’s in our hands?
Much has been written on how to franchise a business or choose one. Still, this particular phase of franchising is simply the tip of the iceberg, so speak. It is doing the franchise work, making it succeed and grow into a viable and vibrant business. That’s really the heart of the matter. I must say that this is a challenge. That is bound to test the maturity of both the franchiser and the franchisee.
The basic and most obvious goal of a franchise is, of course, to make the relationship beneficial to both parties. Still, even then, we must recognize that our actions in going into a franchise relationship may not necessarily be motivated by the material benefits that we can derive from it.
It could be that the benefits we expect are primarily social – “I want to own or belong to a successful team.” “I can prove my business has excellent potential.”- or psychologically- “I would love to do what franchise concept calls for.” “by franchising, I can now expand my business.” – or perhaps even emotional – “I will need a support system to start my business.” “I won’t be alone but have other entrepreneurs managing similar branches.” Still, the bottom line will ultimately be the financial benefits both parties can derive from the franchise relationship.
Indeed, franchising may be distinct from other means of expanding a business. Still, the expectation of an excellent financial return will always be at the root of it.
As in driving a good racing car to peak speeds of up to 220 kilometers per hour, you can make the franchise engine work at peak efficiency only if all of its components work smoothly and harmoniously. Franchises are like vested cars in races -they must be very well maintained, and their parts must always be kept in tip-top condition.
So, to pursue the analogy further, if your franchises were a car, how would you make it work? So you can derive the maximum benefit from it and harness its full potential?
The Operations Manual
The first thing to do is to make the franchise Operations Manual work for you.
Oops! Don’t make the mistake of keeping that manual in a secure and safe place or, even worse, keeping it under lock and key. The Operations Manual is meant to be understood and regularly referred to as you operate your franchise. You must read and fully understand the operating manual of the car. Why? That car manual identifies all vehicle parts, explains how they function, and shows the user how to maintain them. By the same token, the Franchise Operation Manual contains all the information you need to make the franchise functional, whether you are the franchiser or the franchisee. Because it prescribes in detail the standards of the business model, the Franchise Operations Manual is what will enable the franchise system to achieve uniformity and consistency in its implementation.
The franchisee should use the Operations Manual as the primary guide for running him or a static and inflexible set of rules. The franchiser should regularly update and improve it to enable the franchise system to keep up with technology. It won’t be an understatement to say that a franchise system that doesn’t regularly update its Operations Manual is headed towards disaster sometime soon.
The Communication Fuel
Tons of articles have been written about the importance of communication in franchising and in general. Returning to the car analogy, fuel will keep the car running to its desired destination. In a franchise system, the equivalent of the car’s fuel is communication. Communication will enable the significant participants in the franchise system – the franchiser and the franchisee – to achieve unity of vision and objectives and agree on how to achieve them. When there is basic acceptance of the importance of often dialogue between franchiser and franchisee, the franchise system is greatly enriched and grows much faster.
When the unity of minds between franchiser and franchisee is the goal, the communication dynamics in the franchise system become more challenging and exciting. On the one hand, no longer will you have a franchiser who thinks their franchisees are just there to collect fees and not to provide support. In such a situation, even if the initial atmosphere may be stiff and uncomfortable, at least the franchiser and franchisee can now sit down in a spirit of openness and dialogue.
The franchiser must often make the first move by returning to the basics. Particularly on why there is a franchise in the first place. Why is there a franchise in the first place, and why did they decide to franchise the business?
Then the franchisee can begin to verbalize their reasons for choosing the particular franchise among all his other choices. The dialogue can continue and move on to identifying the present concerns of both the franchiser and the franchisee. They need to view these current concerns from initial goals and objectives. When they do, they will find that their goals are not contradictory but actually the same, thus leading to a mutual desire to continue with their franchise relationship. Agreements can then be sealed with a handshake, and both parties can leave the room in high spirits on a positive note on how to further grow the franchise system together.
Preserving the Brand or Trademark
In the past, brands and trademarks were not given an actual value; today, companies’ value goes far beyond their existing physical assets due to the value of their brands and trademarks. For instance, the likes of such giant global brands as Colgate, Coca-Cola, and McDonald’s are of such immense actual value. For this reason, preserving the brand in a franchise system benefits the franchise and its franchisees.
Some franchisees often frown at their franchisers’ strict rules in the use of the trademark, for instance, in the printing of promotional materials that call for written approval of the franchiser in its use. This is actually an unjustified reaction. The preservation of the trademark’s integrity should be a paramount concern. Not only to the franchiser but to the franchisee as well, for it is the trademark that the customers will remember about the franchised product or service. When a customer gets a “wow” experience from using that product or service – translated to a highly favorable perception of the brand – a franchise system can expect to add that customer to its coveted loyal and regular customer base.
So important is the franchise trademark or brand that some franchisers even take pains to prepare. Corporate identity standards manual to give precise specifications for its use and how a brand should be rendered in Pantone colors. Therefore, it is extremely important for all parties in the franchise system to work closely together in communicating a consistent trademark or brand to the market and its various other publics.
Constant Maintenance
The productive life of a car greatly depends on the constant care and maintenance it receives, and some classic cars are even known to outlive the life of their owners. What lesson can we derive from this analogy? It is that the franchise system’s engine could be expected to continue. Producing energy for growth only when the franchiser and franchisee are one in making sure the system undergoes constant improvement. Indeed, while improvements in the franchise operation manual are a must, the entire system must also undergo upgrading periodically.
The big questions are: Is the franchise model still relevant to the changing market? Can the franchise application process be improved to screen applicants even better? When were franchisers and franchisees last sat down to review the franchise agreement? Do franchisees regularly analyze their local market and their position? Is there a sustained effort to promote and market the brand? Are franchisees consistent in doing local store marketing?
Are changes needed in the format of meetings and conferences so that both franchisers and franchisees look forward to attending them? Does the franchise system regularly monitor its present market share versus its target?
Is there a corporate planning conference participated in by both franchisers and franchisees? Are our initial franchise fees and royalties reviewed regularly? Are comparative studies conducted to check the financial performance of both the franchiser and the franchisees?
These are some of the questions that need to be answered. If the franchise system is to outlive the life of its founder, like what McDonald’s has achieved by maintaining a very strong and viable franchise system despite the demise of Ray Kroc.
Making the franchise engine work will constantly challenge both the franchiser and franchisee. Still, when both parties focus on the mutuality of benefits, the task need not be adversarial and unpleasant.
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You may contact Armando “Butz” Bartolome for questions and more information.
By email: aob@gmb.ph
FB Page: Armando Bartolome
Linkedin: https://www.linkedin.com/in/franguru/
Website: https://www.gmb.ph
