Excellence in Franchising: What makes a great franchise?
How do you tell if the franchise opportunity you are looking at is an ethically and well-constructed business system? Jane Masih, Partner at Owen White Solicitors, analyses what makes a great franchise, and offers an example of a brand she has worked with
Like many successful recipes the ingredients are simple: a sustainable business concept led by a management team committed to recruiting the best candidates and providing them with proper training and ongoing support. With these key elements in place, it is possible to build a strong and mutually profitable network of franchisees operating a uniform business system under a strong, recognisable brand name.
A prospective franchisee must therefore carefully evaluate the business opportunity to ensure that the ingredients for success are present. The business credentials and experience of the individuals running the franchise business should be checked. The decision to buy a franchise is likely to be one of the largest financial commitments a prospective franchisee will ever make.
Searching questions should be asked about the individuals running the franchise company. If they have been involved in business failures in the past, a warning bell should ring about whether or not these people are competent to run the franchise company to which the franchisees will be contractually bound.
The business being franchised must be carefully considered to determine if it is sustainable or merely an idea with a brief 'shelf life' or restricted customer base. Prospective franchisees should take a moment to consider objectively if there is a real demand for the goods and/or services being offered and whether that demand is likely to increase. Distractions such as glossy brochures, websites and other promotional material circulated by 'wanabee' franchisors should be ignored. The franchisee must ensure that their franchise business has the potential to operate profitably.
The recruitment process should provide the prospective franchisee with the opportunity to gain a full understanding of the business concept and ensure that only prospective franchisees with suitable qualifications and aptitude are selected. Franchisors interested in franchisees simply because of their ability to pay the initial fee are best avoided. A good franchisor will regard the recruitment process as an opportunity to select franchisees with the skills required to succeed in the business and be prepared to reject candidates who do not meet their particular recruitment criteria.
Once a franchisee has been selected the training programme should provide the skills and knowledge necessary to commence their business successfully. There should also be a programme of further training to ensure that franchisees add to their skills as the business continues.
Experience has shown that if these ingredients exist the franchisee has a better than average chance of success. There are many examples of good franchise practice in the UK where franchisors consistently demonstrate an ability to recruit, train and support franchisees operating a business with a proven track record, offering services and goods for which there is a genuine market and growing customer base under a brand that is protected and benefits the network as a whole.
In summary the ingredients for success are:
- A sustainable business concept
- A strong brand identity owned or licensed by the franchisor.
- Franchisor management with strong business credentials and ability.
- A recruitment process that ensures that each party had the opportunity to evaluate the other.
- Training that ensures franchisees begin operating their business armed with the key skills and knowledge required for their particular industry.
- Further training to enable franchisees to develop their skills and knowledge as their business grows.
- A franchisor committed to providing a structured programme of ongoing support, help and advice.
- A franchise business with a sound financial rationale where both franchisor and franchisee can operate profitably.
Bluebird Care is a good example of such a franchise with good practice. Before setting up this new franchise in 2006 the management team comprising Paul Tarsey and Simon Dalziel worked together for many years at one of the UK's largest domiciliary care businesses. Simon has 18 years experience in franchising, complemented by Paul's 18 years of experience in the provision of domiciliary care.
They have come together under the Bluebird Care banner offering franchisees the opportunity to run their own domiciliary care franchise business. In addition to the operating standards adopted by Bluebird Care, all their franchisees are required to register with the Commission for Social Care Inspection and maintain their registration throughout the term of their franchise agreements. This ensures that the franchisees operate in accordance with government regulation and are subject to an annual inspection by CSCI.
The initial and ongoing fees are structured in such a way as to ensure that, provided franchisees operate in accordance with the system, they can maintain profitability. By the end of April 2007, Bluebird Care will have recruited 12 franchisees in the UK and anticipate having granted master licence rights to the Republic of Ireland, all within 12 months of commencing operations. The head office has recruited additional staff to ensure that all franchisees receive the help and attention at the commencement of their businesses and throughout the term of their franchise agreement.
Franchising excellence is a standard to which all committed to ethical franchisors aspire. The method of achieving excellence may vary from business to business but the ingredients of success are common to all successful franchise networks, whether newly established, as in the case of Bluebird Care, or those who have been trading for many years.