Home' The Franchise Review : June 2015 Contents The Franchise review
The theme for this edition of The Franchise Review is growth
a simple concept for business, but in most cases something
that is extremely hard to achieve. There are additional
obligations in franchise businesses, as Franchisees expect
and deserve to see growth of their franchise sales and profits
on an individual basis, while the major shareholders of the
corporation can also expect physical growth through new
outlets or franchises.
Often, too, without organic growth for Franchisees it is hard to
get quality implementation of new programs, to facilitate great
execution and support, and to maintain high morale in the team.
That said, the biggest opportunity for most Franchisees is
still in their own hands. it’s amazing how many times i’ve
been asked for some ‘local area marketing’ programs for a
store, when the customer service is substandard, and the
store is not as clean as it should be, nor is it well stocked with
best-sellers. in these cases, the best opportunity for local
area marketing is to begin in the store – that will provide the
Franchise with growth.
Many of you know that i bang on about Franchisors needing
to charge a good amount in fees or royalties. But this only
applies if they then provide great service for Franchisees,
and give them good value. if the royalties are sufficient, the
ability to invest back into projects for organic growth becomes
available. and getting good organic growth is the best method
of promoting physical growth, with the incomes and/or goodwill
generated by successful franchises making it more attractive
to new Franchisees to join the business, by acquiring either an
existing Franchise or a new opportunity.
i do believe that many Franchisors keep their royalties too low
initially, in order to make their franchises easy to sell, but this
can be short-sighted. again, though, i qualify – it’s about giving a
Franchisee excellent value for money, so additional fees should
go to projects for growth or providing services to Franchisees, not
simply directly to the bottom line of the Franchisor.
The development of all of this in concert is a ‘virtuous’ cycle,
but all of the elements need to come together to make it work.
Good projects for growth, executed by happy and capable
franchisees, result in happy customers, leading to higher profits
and more opportunities to grow.
it all sounds easy when said quickly, but any part of it can
be an issue, and if each element is not managed carefully, a
destructive cycle can ensue. These cycles can be hard to halt,
but some good interventions can help. as we all know, having
the plan needs to be the very first step to success and, like with
most projects, good communication will assist. Be available to
the field, and communicate the plan calmly and confidently.
Franchisors should not be afraid to ask for help. The Fca has
access to many people who have been there and experienced
the highs and lows of growth, and of franchising’s particular
foibles in the business cycle. Please contact Kym De Britt at
the Fca if you would like help from a ‘hall of Famer’, or to
arrange a discussion with an experienced Franchisor.
Updated Franchise Code of Conduct
On another topic, the new Franchise code of conduct was
suitably given a transition period for production of the new
disclosure documents, which has been very helpful for all of
us. But please ensure that if you have had a material change
in your business in the interim, you update the documents
now, and that the documents you are currently handing out are
totally compliant with your obligations. One of the key planks
for the Fca is to promote best practice franchising, and if a
Franchisor is found by the regulator to have breached this area,
we are all somewhat tainted and our business model suffers.
it may also become a franchise system’s biggest inhibitor of
growth, resulting in brand damage and halting expansion
and development as resources are directed to handling any
resultant investigation and penalty.
A message from the
By warren wilMOT, chairMan, Franchise cOuncil OF ausTralia
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