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There are a lot of franchises out there – not all are good, not all are bad. The important thing is to match the franchise model to what will tick the boxes for you. Some people want a franchise with potential for resale value, some just want a great brand to leverage from while others are simply looking for a wage [ in a self-employed environment ].
It's not often that I come across a franchise that makes me think, “Wow. These guys are really ticking a lot of the boxes of a great franchise model”.
What is important in one industry may be different to what is important in another industry. In the real estate industry, for example, we work with a number of great franchise groups that provide great support to their franchisees. This blog does not apply to real estate franchises - they are different and have different drivers of success.
In the general SME franchise market though, where you have a variety of industries competing against each other for your attention, it is often harder to draw comparison [ and more importantly identify the differences ].
So, what was the franchise that I came across that made me think about this? It’s nothing sexy, nothing requiring cutting-edge technology or state of the art facilities - but it nevertheless serves a purpose. I am seeing more and more of these ‘non-sexy’ businesses getting some great results - and I am loving it when we can help a more traditional industry [that probably has been neglected of entrepreneurial spirit ], by implementing some simple but effective strategies that have a real impact on the customer experience or value proposition.
Here are the things I liked about this particular franchise:
No massive cost to buy into the franchise - in this case it is about $55k. The majority of the cost to setup the franchise actually goes to buying the equipment required. The important thing here is that the franchisor is NOT in the business of ‘selling’ franchises.
The franchisor has limited the number of franchises they will issue and defined generous territories for each franchisee. In some industries this is less important for example where you are wanting to have strong brand presence but for business with a niche service where supply is limited it is good to have some limit on how franchises are issued.
When the franchisor is aligned with your mission [ ie. when they make money at the same time the franchisee does ] it undoubtedly leads to value for everyone.
If the franchise model is all about providing everything necessary for the franchisee to be a success, mentoring becomes important. Many franchisees have never been self-employed before so this support is incredibly valuable so franchisees benefit from past experiences.
I like franchises that take the KISS approach - keep it simple stupid! Even if it is in an industry that required a certain expertise, keep everything in the back-end simple.
When a business is not limited by opening hours, available time or supply, the opportunities are endless. A strong work ethic in a good franchise model can produce great results.
When times are tough we talk to businesses about reducing their breakeven point. One way to do this is to focus on keeping fixed monthly commitments to an absolute minimum. Very low fixed costs each month reduces working capital requirements and the breakeven point.
Often the role of lead generation and sales to a first time business owner is the hardest role of all. When the franchise can deliver some leads through their website and marketing activities it helps enormously - not only because of the value in the lead but also in how it shows the franchisee what works and what doesn’t. A strong brand helps enormously with that.
A collaborative spirit within franchisee group breeds great ideas that make a real difference. You need your franchisees working together rather than competing against each other.
Not all franchises require stock but when they do it is great when stock can be ordered ‘just-in-time’. Money tied up in stock is ‘waste’ so being able to order stock once you have an order from your ultimate customer makes a massive difference.
A unique product not easily replicated helps in many industries. Not so important in some industries but, if you are installing a product, it helps if the product is exclusive. Of course, it helps a lot if the product is patented and protected as much as it can be
Policies, systems and procedures are a must for any franchise. A true franchise provides all things necessary for the operation of the franchise - tried and tested policies, systems and procedures are so much better than just great ideas.
Worked out which franchise it is that prompted this blog? I do not know if this franchise is perfect but I do like a lot of the elements of the model. Perfect though is in the eye of the beholder – what are you looking for and what would be perfect for you in your situation at this point in your life?
Are you a franchisee or are you looking at going into one? Not sure if the one you are looking at is good or not, we would be happy to provide some advice. Does the franchise that inspired this blog sound like the franchise for you? If so, let us know and we can make an introduction.
Are you a franchisor looking to improve your business model or even just implement a standard accounting system for your franchisees? We can help. From strategy development to marketing, legal structures and setting up a standard accounting system for you, businessDEPOT have it covered.