Tale of two franchises

Running a franchise is a long-term commitment and like most things in life, success often lies in the planning stage. Tony Urwin, FDS Northern Franchise Consultant, tells a cautionary tale

To misquote Charles Dickens: 'It was the best of franchises and the worst of franchises'. One business launched in haste, the other slowly and steadily.

'Right,' cried Mr Hasty. 'I'll get a few franchisees and make some fast money.' So he set up his stand and along came a lot of animated people who were impressed by his flashy appearance. Nearby, beside his conservative-looking stand, Mr Ponder was speaking with an interested party of one.

Several months later, Hasty and Ponder met by chance and exchanged a few words. Hasty boasted about the number of franchisees he had signed up. Ponder said his first franchisee was doing well: he was still training his second franchisee, going through the Operations Manual step by step. Between the three of them they were just beginning to see the light at the end of the tunnel.

'Oh', said Hasty, 'I don't worry too much about all that stuff, what we do is quite simple and anyone can pick it up without too much difficulty. Besides it was pointless bumping up the cost of the franchise package by turning out a lot of documentation and employing lawyers to check through it. No need for that'.

Ponder admitted that he had paid out quite a lot at the beginning and it was taking him time to recover his costs. Still, his system seemed to be working in the long run. 'My franchisees' businesses are growing steadily and we are confident that this will continue in the long-term,' he added. Hasty said something about his franchisees raking in money and how, clearly, that was the way to keep everyone happy.

Funnily enough, that was the last time Ponder could remember seeing Hasty, although he did run into quite a few of his franchisees, or more precisely former franchisees, from time to time. They were rather disgruntled because things had not worked out well for them. 'We had money at first,' they would sigh. 'Then it seemed to get less and less, and when we asked Hasty for help he would say a lot, but because there was so little in writing it was difficult to pin him down.'

Ponder read in the paper later that year that Hasty was required to appear at Court. He needed to defend an action brought against him for damages to a group of his former franchisees through misrepresentation and failure to provide the level of support that had been promised in his glossy brochure.

Needless to say, the learned Judge found in favour of the franchisees. Being fly, Hasty avoided paying the damages by putting his franchise company into liquidation. The remainder of Hasty's franchisees found they were unable to continue and their businesses also failed. Nobody seems to know where Hasty went, despite dogged attempts to find him. There is some doubt as to whether he is repenting at leisure.

The Moral of the Tale

Never be fooled into thinking that franchising is a get rich quick scheme. If anything, it's a lot of extra hard work that will completely change your business and your life. The rewards, however, can be great as long as you're prepared to wait for them - and earn them.

Running a franchise network is a long-term commitment and, like most things in life, success often lies in the planning and preparation stage. Resisting the temptation to cut corners in the set-up phase will reap rewards. It is likely that you will be competing for franchisees with established franchisors who have years of experience behind them. Unless you are able to demonstrate a clearly thought out and tested franchise system it is likely that the best franchisees will go to your competitors, and who could blame them?

From my experience, the best new franchisors are the ones who grow their network at a slow and steady pace, learning valuable lessons along the way so that big mistakes can be avoided once the franchise takes off. Fundamental to this is your Operations Manual. This is a living document that