Advisory Sep, 28 2012

Experience and expertise ensure franchise success

Business owners enter the franchise domain with high aspirations. However franchising being a specialised business model needs complete understanding of the concept which most of the business owners do not have (more than at a surface level) and they soon

By Abha Garyali
Sub Editor
Experience and expertise ensure franchise success

Entrepreneurs or successful business owners usually jump into franchising in the influence of others who suggest them to take up franchising as a business model. People suggesting franchise model may or may not be franchise experts but they surely plant the idea of franchising into minds of business owners who have no idea of what it takes to be a successful franchisor.

Business owners with little experience may witness initial success of their brand that encourages them to expand via franchising. They may take to franchising looking at the rosy side of it. However, lack of experience and high expectations from the business model may crush their big dreams. Therefore, it is always advisable to know and understand the franchise model and its pros and cons. Moreover prospective franchisors should also take guidance from franchise experts and established franchisors that have insight knowledge and experience. Besides talking and gaining information a new or emerging franchisor can also follow certain principles to become successful franchisors.

Principles to become perfect franchisor

In the initial period of starting a franchise business, franchisors should keep in mind the five principles for design and development of their franchise program. These guidelines create a sustainable franchise system.

Standardise the brand: New or emerging franchisors should develop rules and regulations for the whole franchise network.  These must be established, agreed upon, properly enforced by all its downstream channels (franchisees) for creating a standard franchise network. Different franchisees with varied rules and laws will make the brand look dissimilar with no uniformity. Therein it would give the customers as well as other potential franchisees a bad impression of the network.

Economies of scale: A good franchisor should keep in mind that a successful franchise needs the capacity to grow and it is the owner’s duty is to set up achievable targets for growth. Therefore economies of scale have to be leveraged so that profit making can be continually improved to benefit both the parties viz franchisor and franchisee. A franchisor just maintaining a certain degree of growth, without scaling it would not reach the success pathway.

Positive relations: Initially it is the franchisor’s duty to allow and maintain good communication between the franchisor and franchisees. The goal is for the relationship to be positive, respectful, and supportive, and to ensure that franchisees are involved with franchisor in the development of the brand.

Change is inevitable: Entrepreneurs functioning and getting success in a certain way may think that it is the best way for his business but it should be remembered that change is always better. If a business does well by a particular style, it should be remembered not to remove or change it but enhance the style to attract more people. Therefore changes are a must by any franchisor whether new or established.

Maintain affordability: For any business, franchise or self owned, it needs to be affordable to be sustainable. Few new franchisors thinking that their products/service are unique may keep the franchise fee and other costs too high. However good and unique the products/services are, they should be affordable for franchisees to invest in. The high fee structure can cause a big hurdle in the franchise success.

It is essential for both the franchisor and his franchise network to adopt and follow the basic principles. Sustainability can never be achieved without a solid foundation in fostering a strong franchise relationship.

Becoming a successful franchisor is not an accidental achievement. It is seen that great concepts fail because they were franchised too early, instead of being designed and developed properly. However, it should also be remembered that each business owner can not become a franchisor. The franchise model should be adopted only after judging the capabilities to franchise.

Related: Terminating the franchise agreement

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