Eight Keys to Franchisability When Franchise Success Means Business Sustainability

Stand up for it, or step down

Once you own the business, you start first by considering personal goals. Do you want to increase the value of your business in order to sell it well in five years? Or to pass it down to your children? Rarely do the entrepreneurs we meet strive exclusively for monetary goals. They prefer winning, but they also enjoy playing the game. These people who have visions will refinance their homes, endure the ridicule of their friends and the doubts of their family, and, of course, work long hours.

Being a Franchisor is different from being an entrepreneur-business owner. The demands are different. The relationship between the Franchisor and Franchisees will be different from that of a manager and his employees. In fact, it closely resembles the relationship one will have with his or her customers.

To that end, the Franchisor must be himself an efficient trade master who is sensitive to the changing climates in business to be successful as the demands and needs of the market will often fluctuate. The following are some important thoughts which might help in changing with the tides:

• Is my company conservative or aggressive? Is it content with growing slowly and steadily, or is it poised for a more venturesome future?

• Is my business projected to grow bigger in the foreseeable future? Does it need an increased market share to survive?

• Any major overhauls in marketing strategies? Are my growth plans subject to the control of investors who are interested in uninterrupted incomes?

• Are my business executives adaptable to new ideas and new ways of doing business?

The thoughts above will assist the franchise owners to decide about an expansion alternative. Useful as they are, these thoughts may go as far as prompting the business to make all necessary changes before an expansion programme is allowed to go underway.

Putting into perspective

Having said that, besides knowing the direction the franchise business is geared for, it is important to also note the importance in determining the appropriateness of the selected franchise business:-

1. Size vs Longevity. Has my business been in operation long enough to project its future success? Is it large enough to provide a level of earnings that would make it an attractive investment on and on?

2. Profitability. Is it making money? Consistently? Predictably?

3. Accessibility. Can other people be taught to run my business in the same way that I do, the way that has made it popular?

4. Systemization. Can all of the daily operations of my business be analyzed and fully described in an operations manual that another individual could follow to produce the same results? Can the same tasks be replicated?

5. Marketability. Can my business concept be communicated or sold to others?

6. Transferability. Can it work just as well in another part of the country or in different market situations?

7. Originality. Do you have a point of difference from your competitors? Is there a distinctiveness factor in your business that would result in consumers buying your product or service?

8. Ongoing financial assistance. A business that is profitable for you might not be profitable for the franchisee. Does enough profit remain, after a franchisee has paid the initial investment in your franchise fee, the costs of getting into business, and an ongoing royalty? Will they need significant financing? Can you help them obtain it?

Strengthened core through collective efforts

No more need be said about the importance of group effort in making a franchise successful. The Franchisee goes on to generate the goodwill and revenue in business, and the Franchisor will in turn, bear the following responsibilities in order to get system going in rhythm with each other:

I. site selection;

II. preparation of plans for remodeling of the premises including layout, and advice in relation to obtaining town planning or building regulation approvals;

III. the training of staff;

IV. purchase of equipment;

V. selection and purchase of stock;

VI. general business management;

VII. getting the business open and running it smoothly;

VIII. Franchisor’s advertising and promotional activities on a national basis;

IX. The Franchisee might receive the benefi t of bulk purchasing and negotiating capacity of the franchisor on behalf of the Franchise Network;

X. The Franchisee will probably have available to them all the expertise and knowledge of the Franchisor’s head office management staff who would be versed in all aspects of the business;

XI. Reducing Franchisee’s franchise risks.

XII. The Franchisee will have the benefi t of the use of the Franchisor’s patents, trademarks, trade names, service marks, trade secrets, know how, etc;

XIII. Where there is ongoing development of the Franchise package and the Franchisor is continually researching and developing programmes designed to improve the business and/or products, the Franchisee will get the benefit of this without having to incur the development costs themselves;

XIV. The Franchisee will obtain the maximum amount of market information and experience which has been accumulated by the Franchisor which is made available to the Franchisees.

All the above is testimony to sustainable franchising. And to achieve it one can never do it alone!

Stanley YapStanley Yap is the Company Secretary cum Business Developer of CM YAP Management Services (K.L.) Sdn Bhd., a fi rm that specialises in accounts, tax, company secretarial, franchise and trademark services with over 30 years of experience. More details at www. cmyapmanagement.com or reach Stanley directly at cmyapmanagement@gmail.com or 016-9578 785.

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