Who Is Responsible For Developing A Franchisee’s Business?

The Buck Stops Here

The Buck Stops Here.

If you listen to most franchisors there’s a simple answer – the franchisee. It’s obvious that’s what they’re here to do. It’s the franchisee’s business so it’s up to them to drive it, grow it and make their fortune. But I wonder if this is just too easy an answer so let’s explore it.

Franchisees start at the entry level of the network with one van, one store, one business unit and learn their trade on the ground. We all know that this is a tricky time; the business plan is written, funds raised and the first steps are taken into the unknown. The franchisee knows though, that you’ve done this before and that you’re there to help and guide. “Don’t do this, try that instead” because we’ve been here and we know what we’re doing – that’s the message that you need to be giving and it’s a message that gives confidence to your network.

All very sensible and most franchisors are good at giving this support but what happens after the first couple of years? The franchisee is growing well, business is booming and they want to expand. Many franchisors will say great, off you go, but do they give any practical support? Usually no, the franchisee is on their own having to employ and manage new staff, re-allocate duties, operate from two locations, oh, and usually see profits drop for a while too.

Tackling Risks

Expanding a business creates risks, and it is important to manage these carefully by telling the franchisee what could go wrong, how likely this outcome is, and putting in place systems to deal with problematic events as they arise. It is impossible to prevent risk entirely as many eventualities can’t be controlled. However, by attempting to predict what could go wrong, you will give the franchisee confidence that you know what you’re doing and they will be better prepared and able to deal with problems if they arise.

It is important to keep staff motivated and behind the expansion. Staff will be important in helping to protect the integrity and success of the existing franchise operation, which should not be allowed to suffer through distractions and difficulties that emerge as a result of expansion.

Critical Path

So now we get to the nub of my argument. Franchisors are very good at encouraging growth or forcing growth by setting targets but they’re dreadful at showing the franchisee how to do it. Loads of case studies and data are available across the franchise network and these need to be leveraged for the benefit of growing franchisees.

Here’s my suggestion: take control of the franchisee’s growth. Build a critical path to growth and train your network on how to plan for the future. A franchisor should be able to analyse the trigger points for growth by analysing the growth of their mature franchisees and prepare a variety of business models to signpost the way for up-coming franchisees.

Franchisees need to be helped to think through the consequences of growth. They need to be aware of “the next level” in the system:

  • What are the turnover triggers that mean I need to expand?
  • What are the organisational changes I’ll need to make?
  • What should I expect and watch for at the next level?
  • What job roles do I need filled?
  • How much extra cash will I need in the short term?
  • What will be the additional costs, revenues and profits?

The value of the critical path is directly proportional to the effort you invest in developing it. Begin by evaluating your current operations – analyse your franchisees into categories that you think might reflect the levels in your organisation. Compare the resources they employ, compare their cost base, look at the equipment they use, look at their training needs, look at their marketing, look at their figures.

Then develop your models and work through them with your network. Encourage your franchisees to move from one level to the next as fast as they can – or are able and let them do it with the confidence of having a tried and tested path to follow.