Some from concept and some where we converted an existing business to the franchised model and I am really happy to deal with either pathway with one really important proviso.
The business owner must have a reasonable understanding on what it takes to run a business successfully – franchised or not.
And unfortunately I have concluded this is easier said than done.
Done well, franchising does help to structure a business so that it has the best chance of success because franchising helps to put some great business practices in place. But overall, I have found that in most businesses, there are some aspects about business success which need to be reviewed and without sound business experience, creating a franchise is not likely to succeed.
Understanding how business works is especially important, because you, as franchisor, will often be training less business savvy-franchisees on successful business practice.
The most useful way I have found to think about business success is to look at the stages of business growth because it is through this journey that many learn the value of different business skills needed as they grow.
The 5 Stages of Business Growth
Way back in the early 1980’s, the concept that businesses grow through defined stages was first discussed in an article published in Forbes by Neil C. If it can preserve its entrepreneurial spirit, it will be a formidable force in the market.
If not, it may enter a sixth stage of sorts: ossification and death.
Franchises often do it better
Yes, even in the 1980’s when the Churchill and Lewis first published their article, it was acknowledged that franchised businesses moved through the stages to Success and Rapid Growth better than those not franchised.
Because franchises often have the following advantages:
First of all, they have, in most cases, a franchisor who really understands, through experience, the essentials of business, making sure clear structures are in place from the beginning to move through Existence and Survival fast.
At the very least they will have:
A marketing plan developed from extensive research
Promotion and other start-up support such as brand identification
Sophisticated information and control systems so the whole franchise can be monitored
Operating procedures that are standardized and very well developed so delegation is consistent and efficient
I would add that, if the franchisor has really done the homework, there will also be:
Strong leadership for the group and an understanding of managing teams of equal partners
Good strategic and operational planning which has input from all franchise partners
And a very clear understanding of money management in the franchise group, making sure that all levels of the franchise can be profitable
I have to say, not many business I see have all these business aspects in place when they start to think about franchising.