The franchise model is nothing new. Albert Singer is commonly thought of as starting the first franchise model in the mid 1800s. Well-known brands such as A/W Root Beer (founded by the Marriott family), and Kentucky Fried Chicken came on the scene in the 1920s and ’30s. Today there are over 2,000 different brands operating over 700,000 franchised units in the United States (www.ifa.org). But why does franchising work, and how can it work exceptionally?
Proven operating model:
Much of the risk and capital outlay for an independent business owner lies in developing, testing, and refining a business model. In a franchise, the Franchisor has already accepted that risk, capital investment and responsibility. Everything from site selection to operating manuals, to technology platforms and marketing strategies and tools should allow a new franchise owner to hit the ground running
Anyone who has raised children in the United States in the last 50 years can equate to this. You are driving down the road. Your kids are hungry. They see a two signs ahead; one for McDonalds and the other for Bill’s burgers. Where do you think the car is headed? We are a nation brought up and driven by brand and brand loyalty. Your ability to capture market share and capture it quicker largely depends on the brand and brand reputation that your Franchisor has established.
Network of Owners:
One of the most powerful things I think often overlooked in joining a franchise system is the ability for owners to network and learn from other owners in the same franchise family. As a franchise owner, you are not alone. Not only do you have the corporate staff of the Franchisor seeking to help you grow, but also the dozens, hundreds or even thousands of other franchise owners who have “been there done that” and are usually eager to help new owners prosper as well.
These are some of the main reasons why the Franchising accounts for about 3% of the Gross Domestic Product (GDP) in the United States alone. But how and why should franchising exceed extraordinarily?
A few key things that often go unnoticed or simply ignored by Franchisors which I think is critical for those exceptional brands over time:
Management Team experience:
The operating models, marketing, support strategies, etc. is driven by the senior management team of the Franchisor. The ability and willingness of the Franchisor to collaborate with franchise owners along with a “win-win” mentality is crucial to exceptional and long term growth for both parties. Look at the track record of the management team. Is there a high commitment and low turnover of personnel at the corporate level? What do the franchise owners say about the leadership team of the franchisor (see FirstLight’s 2015 Franchise Business Review report (https://www.firstlightfranchise.com/why-firstlight/franchisees).
One of the keys to building long term, cohesive relationships between franchisor and franchisees is the approach that the leadership takes with its franchisees. Does the management team view the viability of their franchisees as their main focus? Their mission? Do they view their franchise owners as partners building a brand? Or a location number who pays monthly royalties? The most prosperous franchise brands now and in the past come to the understanding early on that if their franchisees don’t grow, then the brand doesn’t grow. Howard Johnsons ring a bell to anyone (without dating myself)?
Franchise owner selection:
The best and most prosperous franchises typically are very selective on who they “let in” to their family. This comes full circle. If the franchisor is providing best in class support, tools, service and support to their franchise owners, then the franchisor is expending a great deal of personnel and capital to do so. As such, it behooves them to make sure (as sure as they can) that they are only bringing in the best and brightest owners into their family. Anything short will result in incremental time, support, investment on the franchisor side, and possible failure/closure/resale on the franchisee side.
For more information on a FirstLight franchise, visit www.firstlightfranchise.com