There are a wide variety of franchise systems and different types of franchisors in the market at any given time. Many of these systems are excellent businesses but lack the leadership and vision at the top to make the franchise a solid investment opportunity. Other franchises have great leadership and offer excellent value propositions to the franchisees who choose to invest in their brand. Franchise Marketing Systems has worked with a significant amount of both new and mature franchise brands who have different leadership styles, methodology and ways of driving the ship. Although it seems there is not one type of leadership method that works best, there certainly is a perspective that makes all of the difference. Franchisors who look at and treat their franchisees with respect and admiration realize the best growth rates and long term expansion of their franchise system while franchisors who lead with a short-term vision and focus on the transaction of selling the franchise tend to have shorter lifespans.
When a franchisee interviews a franchisor to determine whether they should invest in a brand, our advice is to look at several aspects of the franchise relationship. First, a potential franchisee should figure out what the ROI is on the franchise fees and the royalties that they will be paying to the franchisor and what they will be getting in return. The franchisee should work to make the intangible aspects tangible and try to put dollar figures next to them. What is training worth? At corporate and onsite at the franchisee’s location? How much ongoing support will franchisees receive and what is the franchisor doing for the franchisees after they open to justify a royalty? What strategic initiatives will the franchisor be undertaking to continue to add value to the franchise owners? Second, get a feeling for the morale and overall attitude that people have in the franchise system and how franchisees in the system perceive the treatment they receive from the franchisor and support staff. Does it feel like family or more like military? Is it a dictatorship or a democracy? You will get an impression of who you are dealing with after you spend time interviewing franchisees. Last, get to know the franchise marketing systems that are in place to generate new client activity, every good franchise system should have a way to promote the business and drive customer traffic.
The theme is consistent whether you are looking at marketing, value proposition, training, support or other aspects involved in the franchise relationship, the leadership of the franchise needs to be aligned with the goals of the franchisees who are buying into the business. Franchise success is generally pretty simple in most cases, a successful franchisor needs to be able to accomplish two key things when building a franchise organization. One, be able to market and sell the franchise effectively by communicating a strong value proposition and committing to franchise recruitment. Two, help franchisees be successful and do everything possible to improve their bottom line in their business. It seems like simple math, franchising should be easy right?
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