Over my 35 years in the franchising business, I’ve been asked which franchise is the best to buy. This is a loaded question in the franchise business. My response is “it depends.”, however, one of the best ways to evaluate their franchise opportunity is by their franchise support.
People looking for a new business look to a franchise so they are not on their own. Can your perspective or current franchisor say that they have support on a regular basis?
Unfortunately, in this day and age, many franchisors cut the support function in their business. This is the LAST place to “trim the fat” in a franchise organization.
What support do you need? Here is a list of bare minimums. We’ll talk about each of them in a different blog.
In case of emergency
What is the best way to run your new franchise? The franchisor should be coaching you on a REGULAR basis. You are buying a franchise so the franchisor can show you how to run your business and help make you successful. That is why the business is franchised so you can duplicate the franchise model and realize the success the franchisor portrays in their FDD.
This may sound basic; however, you should know your operations support person, see them at least on a monthly basis, know their phone number and their email address. More importantly, they need to be responsive and accountable to the franchisor and to you, the franchisee.
You should be on a call with them on a weekly basis as well as working with your fellow franchisees. Talk about what is working in your business and talk about your challenges.
Let's talk about a few things that you can discuss with your operations person. The first of which is how to maximize efficiencies in your new business so you can maximize profitability. This can be simply observed by your operations person to provide you with feedback. Secondly, work with them on your profit and loss statement. Your operations person should be an expert in looking at your business to help you maximize efficiencies and your profit and loss statement to identify key areas to maximize your profitability in your new franchise.
It is in your best interest to be profitable so you can develop and grow your business. It is also in the franchisors best interest to help you be profitable so they can be more profitable. The bottom line is, franchisors make money off of royalties. The higher your royalties, the higher their profitability.
When you are in your due diligence period looking for a new franchise, be sure to ask your perspective franchisor specifics regarding their operations support. When you talk to current franchisees, ask about how they are supported by their operations team. Ask specific questions on the different topics I've listed above so you can get real-time information and unbiased feedback.
Ask for specifics. Ask how the franchisees work together to help each other and how does the operations team facilitate this?
In my next blog, I'll talk about what you should look for in marketing support.
As a franchise consultant, I often have clients who fear the systems, procedures, rules, policies and procedures they have to adhere to as franchise owners equate to “Straitjackets” that stifle innovation and creativity.
While, yes, you do have to comply with the franchisor’s systems … for example, there are 3 pickles on the McDonald’s Big Mac, not 4, not 2 … but 3 and ONLY 3. But, franchises create systems from years of experience and trial and error. That’s one of the greatest reasons for investing in a franchise -- you don’t have to “invent the wheel” yourself.
That said, can you “make the wheel rounder?” The short answer is … absolutely!
Here’s the favorite example I share with my clients: to this day, the best-selling sandwich in the history of McDonald’s is the Big Mac.
The Big Mac was developed by a franchisee!
Cutting and pasting from Wikipedia, here’s a brief history of how this best-selling product came to be:
The Big Mac had two previous names, both of which failed in the marketplace: the Aristocrat, which consumers found difficult to pronounce and understand, and the Blue Ribbon Burger.
The third name, Big Mac, was created by a 21-year-old advertising secretary who worked at McDonald’s corporate headquarters.
The Big Mac proved popular, and it was added to the menu of all U.S. restaurants in 1968.
Even well-established franchises that have hundreds of franchisees and hundreds of units throughout the US, innovation is encouraged. The franchise companies realize they the great advantage of having many, many franchisees who are all working the same processes. With that many smart people operating the same businesses, some franchisees are inevitably going to find ways to accomplish procedures more efficiently and/or effectively.
Franchise companies embrace this fact and actually create venues to promote improvement and innovation.
Every well-developed franchise company eventually forms a franchise advisory council made up of franchisees from throughout the system. Franchise executives meet with their advisory councils typically each quarter and during these meetings, the executives report on progress from the past quarter and objectives for the next quarter and for the year. But they also use this forum to solicit input from the franchisees.
What’s working well? What’s not working well? How can we improve? What are the franchisees in the field saying? Are there better ways to accomplish what we do?
Even more, at just about every annual conference franchises in any industry conduct, typically each year, they present “round table sessions.” These sessions are usually conducted in large meeting rooms at the franchise convention hotels. In the rooms are a half-dozen or so 20-seat round tables and at each table sit franchise owners who have found a technique to accomplish the systems of the franchises more efficiently and/or effectively.
Franchisees attending the conventions move from table to table every 15 or 20 minutes or so at the sound of a bell in order to be able to learn from each of their fellow franchisees who are hosting round tables.
Franchise companies treasure such events because when a franchisee learns how to improve procedures, advertising, marketing, or operations from a fellow franchisee, the franchisees are quick to adopt the new methods.
No … franchising is not a “Straitjacket.”
There is plenty of room for innovation and improvement and many franchise owners enjoy helping the entire franchise system evolve, improve and thrive.
Who knows? After you invest in a franchise, you just might be the franchise owner who creates your franchise system’s “Big Mac!”
Dave Cooley, Franchise Consultant
Let’s learn more about franchising together.
Call me: 720.259.9475 (Denver – Mountain Time)