The discussions in this article deliberate on only some of the issue (as a start) that is faced by the franchise systems. They are based on the feedback and information gathered during engagements with various stakeholders in the franchise sector. It is hoped that the franchisor is able to draw some insights from the following and be able to refine and apply the learning points in their franchise business systems.
The following right things to do in franchising are intended to look into some of the items within the factors that enable the business to be successful (e.g. leadership; people; processes; partners; strategies and offering) as well as the results that matters (e.g. business results; customer results; people results; and society results).
Leaders and Followers Situation in Franchising
The franchise business is about the franchisor leading the franchisee to success based on the franchisor’s knowledge and experience in creating success in the basic business model of the franchise system. In leader and follower situations, it is implied to mean that everyone moves with a single purpose – in franchising, the franchisor takes the lead role and the franchisee, the follower and both exist to work together to achieve common success.
1. Hence the franchisor as a leader needs to master and learn the techniques of leadership in order to get the franchisee and the staff to follow and support the franchisor’s decision.
2. Conflict can also surface and cause stress in the relationship between leader and follower. The franchisor is expected to manage franchise relationship by understanding the early warning signs and adopting proactive conflict resolution strategies and initiatives and not wait until conflict occurs.
3. A franchisor that is able to maintain good relationship in his franchise network is definitely able to create a more productive teamwork environment.
4. As a leader, the franchisor is also expected to manage and motivate his ‘franchise team’ to achieve and exceed targets and reap the benefits from the franchise business.
Market Relevance in Franchising
Staying relevant to the overall market’s expectations is mainly the franchisor’s responsibilities and as for the franchisee, his focus is on the local market in his territory.
5. The franchisor need to master the focus on the targeted segments and applying the relevant marketing strategies and techniques to ensure that the whole franchise network benefits from his role. Such benefits need to be translated into maximizing the return on investment for the franchisee.
6. The franchisor also needs to be alert to the tricks used by some of the big names in franchising which have helped them to achieve success. Such tricks need to be evaluated for adoption/application in his franchise network.
7. The franchisor needs to be able to satisfy market expectations of not only consumers but also current and potential franchisees. The franchisor now has an added management role – i.e. marketing and management of his franchise business.
Creating Business Advantage in Franchising
A franchise business has the role of extending the business advantages created by the franchisor throughout the franchise network. Such advantages are critical to the franchisees as they are dependent on the experience and business competence of the franchisor.
8. The franchisor’s knowledge in applying the techniques of cash flow of the business in driving the profits for the franchisees as well as across the franchise network is critical to the franchisor’s and franchisee’s business.
9. Franchisees enter into a franchise agreement for a period not less than five years. The offering of products and services via the franchise system must be able to generate profits during the tenure of this period and beyond. Thus the new products and services need to be introduced regularly in order to overcome the life expectancy issues and be able to generate profits in a sustained manner. Franchisors are responsible for the introduction of viable new products and services into the franchise system.
10.Branding in franchising is one important element that cannot be neglected. As can be seen in some of the early local brands that are not brought up to date with customer perceptions and current development, they now suffer from decline in sales and reputation. If the brands are not renewed/refreshed on a continuous basis by the franchisor, then the whole franchise business may in for a decline and this affects everyone in the system.
In conclusion, it is imperative for the franchisor to own up to the issues and challenges in his franchise business as well as those that are faced by the franchisees. Even though there is no guarantee of success in any franchise system, the franchisor needs to support and perhaps learn from the difficulties faced by the franchisees for the sake of the other members of the franchise system, the franchisor included.
Franchising only mean that the franchisor and franchisee need to work closely together and that the franchisor shall do the right things for the benefit of everyone.
Happy New Year and may 2012 bring about greater success
Marzuki Ahmad is the Managing Director and Principal Consultant of Franchise Channel (M) Sdn Bhd.
He also sits on the Franchise Advisory Board, which is responsible in advising the Ministry of Domestic
Trade, Co-operatives and Consumerism and the Registrar of Franchise on franchising matters.
For more information, visit www.franchise-channel.com.
Marzuki can be reached at firstname.lastname@example.org