Before you start Franchising
Before you start Franchising
Prospective franchisees will see the franchise as a much more credible and attractive proposition if it is affiliated with a credible non-profit worthy institution like Confederation of Indian Industries, Franchising Association of India etc. Mr. C. Y. Pal, President, Franchising Association of India adds that as franchising being at a nascent stage and the markets currently unregulated, there are several cos. which may not function in the most transparent manner, and thus, such associations are of great value.
Before designing the functional components of the franchise, the service being franchised must be clearly defined. What is the product / service? How will it be delivered? To whom and by whom? And under what circumstances will it be delivered? All aspects of franchise operations should be field tested and optimised before expanding the network. Franchise managers need to remember that franchising is, by definition, a mechanism for rapidly expanding a proven business model. The entire franchise system is at risk of failing if its business model is flawed. The franchisor should have atleast 2 – 3 successfully running, company owned outlets in different localities. The only way to prove the viability of the model is to test it. Before franchising a service, the service delivery model and all its functional components must be developed and tested to ensure that they can be operated feasibly and that, taken together, they bring about the desired result. Only then should franchise expansion occur. The company owned outlets are live examples for the franchisee to visualise the role they would be playing.
Initial buy-in and endorsement of key franchisees lends credibility to the franchise chain and facilitates its growth. Involving franchisees in the initial design phase of the franchise is key to obtaining their buy-in. Franchisees also provide invaluable inputs. Franchise managers should ensure that they identify and consult with their franchisees from the outset and that they involve them in key design issues. It is also important to obtain the endorsement of a locally recognized and well-respected institution. Franchisees need to be consulted and convinced before decisions are made. Decisions cannot be forced upon them.
Clear guidelines should be given covering all aspects of service delivery. These guidelines help both the franchisee and the franchisor understand precisely what it is that they are marketing to their customers, i.e. what consumers can expect from franchisees. Only after defining the product should components of the franchise, such as training and evaluation, be developed.
A fully functional and reliable Management Information System must be in place before implementing the franchise so that data can be recorded accurately from the beginning of the project and proper monitoring and evaluation can occur. The MIS should be designed to adapt to changing data requirements over time. Reasonably reliable data are essential to evaluate a program and its effects. While the need for a sound data system seems obvious, experience has shown that it can be very difficult to achieve. The system must be based on a thorough needs assessment and must respond to the development and use of well-designed paper records and data models at appropriate decision points in the program’s life.
Additionally, program staff must understand and have confidence in the MIS. If they do not, they will create their own independent systems for record keeping. Reliability problems with MIS may result in training, sales and finance staff maintaining different, overlapping data systems (in addition to the MIS). Not only is this inefficient, but it also results in conflicting information that is difficult for program managers to interpret and manage. The importance of reliable and coherent MIS data cannot be overstated: information is the basis of the feedback loop that allows the franchisor to monitor franchisee performance and thus maintain appropriate control of the franchise.
Data also provide the basis for evaluation, which is critical to assessing and improving the services franchisees provide. Finally, the MIS must perform a variety of different functions efficiently, such as tracking sales and quality of service, and still yield systematically consistent results. Gradually, new parameters to the MIS can be added to improve measures of quality, keep track of changes in providers.
The franchise agreement is a legal document that clearly stipulates the roles and responsibilities of franchisor and franchisee and that outlines the mechanisms used to enforce contractual compliance is necessary. A strong contractual agreement should be balanced with the need to make the alliance more appealing. It should also stipulate the duration (generally 10 to 20 years) of the franchise agreement. Because of the complexity of these documents, it is recommended that the start-up franchisor find a lawyer who has had experience in the franchising field.
A strong franchise support team large enough to cover franchisees adequately and with appropriate frequency is necessary to offer on-going training, follow up and support and also control the quality of the service provided.
This can prove to be one of the most beneficial features of the network.
Having company executives follow-up with franchisees is clearly an important contributor to the franchise module’s success. But the training course is only the beginning of a very long process . providers need to feel comfortable with their work and stay motivated over the long run. This is exactly what this system accomplishes. During site visits, the monitoring team give franchisees the opportunity to ask questions and discuss concerns. As this team has personally recruited and trained the franchisees, the comfort level with these franchisees is high.
This team helps franchisees maintain their motivation and boost their morale when their business volume is not high. Finally, a strong monitoring and support team is required to ensure that franchisees adhere to the specified norms and maintain appropriate records.
A quality training program is crucial for the success of the chain. To the extent possible, the training program should be developed in-house so that the franchisor has direct control over the quality and scheduling of training. In-house training development would no doubt be an added expense, but it pays off in the long run. It is well worth as compared to the benefits of having greater control over the quality and scheduling of training.
The process of creating training programs involves identifying training needs; developing training curricula to address identified needs; writing a trainer preparation course; recruiting and training master trainers who would be responsible for developing new trainers. The thoroughness and effectiveness of the training program is an evolving one.
The franchisor also needs to prepare a formal and comprehensive evaluation of these training programs. The program should be evaluated by the trainer (whether it is effective with the audience) and also by the franchisee (if some aspects are overemphasized / not taken care of)
Financial feasibility should be thoroughly assessed. In addition, before franchising, it is important to determine, through the development of pro forma financial statements, the feasibility of the entire operation. The proper franchisor cash flow statement should illustrate to the franchisor and possible investors the actual start up costs and returns that the franchisor will incur. Most franchisors will incur a loss during the first and second years. Many franchisors hope to overcome this loss during the second or third year or operations. The proper pro forma cash flow and balance sheet should give a proper picture and illustrate the financial hopes of the organisation.
A franchisee is convinced about a particular franchise opportunity, if it is lucrative (in consideration with his investment). One of the most important aspects of developing a franchising program is taking the proper steps to develop a Business Plan. The franchisor should ensure that the franchisee fee charged is just right. If the free he is charging is low (his brand will be perceived to be a weak one) and if high then it may shy away prospects. The royalty being charged should be nominal, so that the franchisees view it as a viable and lucrative proposition.
McDonalds is synonymous with successful franchising, for the fundamental reason that it allowed its franchisees to prosper first and then due to strong evangelism, more franchisees were convinced to join McDonalds and simultaneously, McD benefited from the economies of scale.
To the extent possible, community-based activities should be incorporated into strategies to create demand. These activities should involve the franchisees. For maximum leverage these initiatives should be related to the product / service provided. It should benefit your target audience. More in-depth information (pertinent to its service) should be disseminated, so as to create future demand for services. The franchisor should try to reach more potential clients through direct public contact.
Care should be taken to provide ongoing motivation to franchisees. While involvement in the franchisee’s operations would benefit franchisors economically (through increased clientele) other incentives must be built in to the partnership to keep franchisees motivated (especially in times when business is low) when they do not see immediate or clear economic rewards.
The franchisor needs to be able to properly identify the target market, the product being offered, and the advertising program which will be used in the franchising units. Additionally, many franchisors strive to develop a proper franchisee profile which delineates the characteristics of the franchisees whom they seek as partners in the franchising business. A manager profile is often also developed which franchisees may then use to screen or hire prospective managers for the organisation. It should also be noted that different form letters, paragraphs, and packages should be developed by the marketing people before the franchise is actually up and operating.
CONCLUSION
The franchising program is an evolving one, and a successful franchising organisation should be flexible and continuously fine-tune and refine its module and address the various challenges arising with respect to legal, financial, sales, administrative, and marketing areas. Franchising is a vibrant and exciting opportunity for businesspeople that desire to expand their operations through this method of doing through this method of doing business. Franchising is the wave of the future.
Before you start Franchising - To learn more about this author, visit Dhawal Shah's Website.
Like this article? Share it with your friends
The Prospective Franchisee: An important aspect of developing a franchised business is the identification of franchisees. The franchisor should realise the necessity of developing a methodology to predetermine some method for choosing perspective franchisees. The franchisor should not just focus on individuals with adequate capital but also on those that possess the moral character to be strong franchisees, as the initial franchisees play a pivotal role in the long term success of the chain.
Prospective franchisees will see the franchise as a much more credible and attractive proposition if it is affiliated with a credible non-profit worthy institution like Confederation of Indian Industries, Franchising Association of India etc. Mr. C. Y. Pal, President, Franchising Association of India adds that as franchising being at a nascent stage and the markets currently unregulated, there are several cos. which may not function in the most transparent manner, and thus, such associations are of great value.
Before designing the functional components of the franchise, the service being franchised must be clearly defined. What is the product / service? How will it be delivered? To whom and by whom? And under what circumstances will it be delivered? All aspects of franchise operations should be field tested and optimised before expanding the network. Franchise managers need to remember that franchising is, by definition, a mechanism for rapidly expanding a proven business model. The entire franchise system is at risk of failing if its business model is flawed. The franchisor should have atleast 2 – 3 successfully running, company owned outlets in different localities. The only way to prove the viability of the model is to test it. Before franchising a service, the service delivery model and all its functional components must be developed and tested to ensure that they can be operated feasibly and that, taken together, they bring about the desired result. Only then should franchise expansion occur. The company owned outlets are live examples for the franchisee to visualise the role they would be playing.
Initial buy-in and endorsement of key franchisees lends credibility to the franchise chain and facilitates its growth. Involving franchisees in the initial design phase of the franchise is key to obtaining their buy-in. Franchisees also provide invaluable inputs. Franchise managers should ensure that they identify and consult with their franchisees from the outset and that they involve them in key design issues. It is also important to obtain the endorsement of a locally recognized and well-respected institution. Franchisees need to be consulted and convinced before decisions are made. Decisions cannot be forced upon them.
Clear guidelines should be given covering all aspects of service delivery. These guidelines help both the franchisee and the franchisor understand precisely what it is that they are marketing to their customers, i.e. what consumers can expect from franchisees. Only after defining the product should components of the franchise, such as training and evaluation, be developed.
A fully functional and reliable Management Information System must be in place before implementing the franchise so that data can be recorded accurately from the beginning of the project and proper monitoring and evaluation can occur. The MIS should be designed to adapt to changing data requirements over time. Reasonably reliable data are essential to evaluate a program and its effects. While the need for a sound data system seems obvious, experience has shown that it can be very difficult to achieve. The system must be based on a thorough needs assessment and must respond to the development and use of well-designed paper records and data models at appropriate decision points in the program’s life.
Additionally, program staff must understand and have confidence in the MIS. If they do not, they will create their own independent systems for record keeping. Reliability problems with MIS may result in training, sales and finance staff maintaining different, overlapping data systems (in addition to the MIS). Not only is this inefficient, but it also results in conflicting information that is difficult for program managers to interpret and manage. The importance of reliable and coherent MIS data cannot be overstated: information is the basis of the feedback loop that allows the franchisor to monitor franchisee performance and thus maintain appropriate control of the franchise.
Data also provide the basis for evaluation, which is critical to assessing and improving the services franchisees provide. Finally, the MIS must perform a variety of different functions efficiently, such as tracking sales and quality of service, and still yield systematically consistent results. Gradually, new parameters to the MIS can be added to improve measures of quality, keep track of changes in providers.
The franchise agreement is a legal document that clearly stipulates the roles and responsibilities of franchisor and franchisee and that outlines the mechanisms used to enforce contractual compliance is necessary. A strong contractual agreement should be balanced with the need to make the alliance more appealing. It should also stipulate the duration (generally 10 to 20 years) of the franchise agreement. Because of the complexity of these documents, it is recommended that the start-up franchisor find a lawyer who has had experience in the franchising field.
A strong franchise support team large enough to cover franchisees adequately and with appropriate frequency is necessary to offer on-going training, follow up and support and also control the quality of the service provided.
This can prove to be one of the most beneficial features of the network.
Having company executives follow-up with franchisees is clearly an important contributor to the franchise module’s success. But the training course is only the beginning of a very long process . providers need to feel comfortable with their work and stay motivated over the long run. This is exactly what this system accomplishes. During site visits, the monitoring team give franchisees the opportunity to ask questions and discuss concerns. As this team has personally recruited and trained the franchisees, the comfort level with these franchisees is high.
This team helps franchisees maintain their motivation and boost their morale when their business volume is not high. Finally, a strong monitoring and support team is required to ensure that franchisees adhere to the specified norms and maintain appropriate records.
A quality training program is crucial for the success of the chain. To the extent possible, the training program should be developed in-house so that the franchisor has direct control over the quality and scheduling of training. In-house training development would no doubt be an added expense, but it pays off in the long run. It is well worth as compared to the benefits of having greater control over the quality and scheduling of training.
The process of creating training programs involves identifying training needs; developing training curricula to address identified needs; writing a trainer preparation course; recruiting and training master trainers who would be responsible for developing new trainers. The thoroughness and effectiveness of the training program is an evolving one.
The franchisor also needs to prepare a formal and comprehensive evaluation of these training programs. The program should be evaluated by the trainer (whether it is effective with the audience) and also by the franchisee (if some aspects are overemphasized / not taken care of)
Financial feasibility should be thoroughly assessed. In addition, before franchising, it is important to determine, through the development of pro forma financial statements, the feasibility of the entire operation. The proper franchisor cash flow statement should illustrate to the franchisor and possible investors the actual start up costs and returns that the franchisor will incur. Most franchisors will incur a loss during the first and second years. Many franchisors hope to overcome this loss during the second or third year or operations. The proper pro forma cash flow and balance sheet should give a proper picture and illustrate the financial hopes of the organisation.
A franchisee is convinced about a particular franchise opportunity, if it is lucrative (in consideration with his investment). One of the most important aspects of developing a franchising program is taking the proper steps to develop a Business Plan. The franchisor should ensure that the franchisee fee charged is just right. If the free he is charging is low (his brand will be perceived to be a weak one) and if high then it may shy away prospects. The royalty being charged should be nominal, so that the franchisees view it as a viable and lucrative proposition.
McDonalds is synonymous with successful franchising, for the fundamental reason that it allowed its franchisees to prosper first and then due to strong evangelism, more franchisees were convinced to join McDonalds and simultaneously, McD benefited from the economies of scale.
To the extent possible, community-based activities should be incorporated into strategies to create demand. These activities should involve the franchisees. For maximum leverage these initiatives should be related to the product / service provided. It should benefit your target audience. More in-depth information (pertinent to its service) should be disseminated, so as to create future demand for services. The franchisor should try to reach more potential clients through direct public contact.
Care should be taken to provide ongoing motivation to franchisees. While involvement in the franchisee’s operations would benefit franchisors economically (through increased clientele) other incentives must be built in to the partnership to keep franchisees motivated (especially in times when business is low) when they do not see immediate or clear economic rewards.
The franchisor needs to be able to properly identify the target market, the product being offered, and the advertising program which will be used in the franchising units. Additionally, many franchisors strive to develop a proper franchisee profile which delineates the characteristics of the franchisees whom they seek as partners in the franchising business. A manager profile is often also developed which franchisees may then use to screen or hire prospective managers for the organisation. It should also be noted that different form letters, paragraphs, and packages should be developed by the marketing people before the franchise is actually up and operating.
CONCLUSION
The franchising program is an evolving one, and a successful franchising organisation should be flexible and continuously fine-tune and refine its module and address the various challenges arising with respect to legal, financial, sales, administrative, and marketing areas. Franchising is a vibrant and exciting opportunity for businesspeople that desire to expand their operations through this method of doing through this method of doing business. Franchising is the wave of the future.
Before you start Franchising - To learn more about this author, visit Dhawal Shah's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
|||
Staging DivaDebra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website |
|||
Joe DagerJoe Dager is President of Business901, a progressive coaching company providing no-nonsense direction in areas such as Lean Six Sigma Marketing and organized referral marketing. What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe’s ability to combine his expertise with “out of the box” thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with.” - James R. If you want to learn more about Business901, start a conversation with us. We can be found @ Web/Blog: Business901.com Web/Blog: FundingYourNonprofit.com LinkedIn Profile Follow me on Twitter - Visit Joe Dager's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
|||
Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Dhawal's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
|
||
|
||
|
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 PIPS Power Book The Leader’s Edge Learn From Success Business Success By Design Increase Sales |
|
 | ||
 |
Top 50 Blogs For Startups
Top Blogs To Watch In 2008 | |
 |
Top 50 Raising Capital Blogs
Top Blogs To Watch In 2008 | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
