Management
Issue No. 39 - February/March 2008
Can your business be franchised?
There’s no question the franchise option is on the minds of many SME business proprietors searching for a ‘growth’ strategy. In recent times, many large corporations have converted to the Business Format Franchise structure to further develop
their business.
Perhaps restricted by a shortage of growth capital, or the problem of finding sufficient and suitable key staff to support a growth plan, many companies are now looking closely at the franchise option. Franchising enables companies to grow by using other people’s skills, labour and capital to realise faster market share growth and expansion.
That’s what franchising is: quite apart from the legal definitions, franchising is a concept to facilitate growth in market share by bringing a group of like-minded people together under a one brand banner.
Before embarking on a franchise plan it is important for business owners to understand some of the implications.
The business to be franchised must be a proved profit maker with clearly defined objectives and market share opportunities. Without a history of individual success it is unlikely any franchising program will work.
Perhaps the most important element to consider is management structure. Franchise owners, unlike employees, own their businesses and have substantial rights. Providing they comply with the terms of the franchise agreement, they can operate their business with a degree of independence. They must, however, follow franchise guidelines to the letter.
Successful franchise owners are the key to entire group’s success and the challenge for the franchisor is to manage a group of people with differing personalities
and expectations.
Franchise owners will often test the boundaries of the relationship by doing things that are not strictly in accordance with the system. They explore new - and perhaps better - ways to grow their business. The franchisor has to assess the merit...
