Australia is the most-franchised country in the world (per head of population). Well run and properly structured, franchising can be an exciting growth method for your business. Let’s take a look at some of the key benefits of franchising:
- You can grow the network of your company by using the manpower and financial resources of the franchisee
- There’s no need to concern yourself with the day to day operation of each outlet
- You have the potential to earn profits without high capital risk
- Your network has the potential to grow rapidly
- You manage fewer staff yourself, therefore having fewer staff challenges
- Owners who take on franchise opportunities tend to be motivated and committed
- It allows you to service national customers using your network of outlets
The benefits of a successful franchise opportunity are clear. You only need to look to some of the world’s biggest companies to understand the potential (McDonalds, anyone?). But, franchising is neither an easy nor a guaranteed road to success. Here are the key points you need to consider:
- You should pilot test the system with company-owned and operated outlets first
- The business must be successful, distinctive and replicable
- You’ll need proper professional advice from a solicitor, banker, accountant and possibly a Franchise Consultant
- An experienced Franchise Solicitor should write the franchise agreement
- You’ll need to write an operations manual
- You should choose your franchisees slowly and very carefully
- You’ll need first class training for new owners and their staff
- Maintaining good ongoing relationships with new owners will be crucial
- There needs to be a big focus on franchisee satisfaction and profitability
- Your marketing, advertising and HR policies will need to be excellent
It’s important to recognise that the high level of interest in franchising in Australia does not result in most new franchise systems actually entering the market. The reason for this is simple. Establishing and testing a business concept is not as easy as some would believe, and furthermore, Australia now has some of the world’s most stringent franchising legislation. This means there is little or no margin for error for new franchisors.
Here’s what you need to get right:
Prove the business concept
Given the high failure rate of small businesses in Australia (80% within 5 years), your business should be successful after at least 3-5 years to prove that it is a viable concept. This will also demonstrate whether it has ongoing demand in the marketplace, systems that can be replicated and marketing, logistics and training structures capable of supporting new stores in a variety of locations. It is highly desirable to open your own second outlet during this time to test the effectiveness of your procedures, systems and training. You’ll no doubt learn valuable lessons during this time that can be applied to franchises. Keep in mind that most good franchises offer something popular and familiar, but with a twist to it. For example, a pizza delivery business with all-organic ingredients.
Get good advice
Want the best advice when it comes to your franchising plans? Then hit up the experts who are skilled and experienced in franchising. To find these specialists, visit the Franchise Council of Australia here: www.franchise.org.au, or at www.franchisebusiness.com.au. This will ensure you get the best advice, and, in particular, make sure that all aspects of your intellectual property are safe throughout the franchising process.
Do you have the necessary skills and attitudes?
So obviously you have to be good at operating your present business. But running a franchise group is a different story. You’ll need to be exceptionally organised and a fantastic communicator with the ability to train and motivate others. You’ll be dealing with people who have invested a lot of money and who may have unrealistic expectations about what support they are entitled to. You’ll need to be able to maintain harmony in the relationship and manage the politics that tends to creep into any group of people working together.
Prepare for change
Being a franchisor means you’ll be engaged in completely different activities than you were as a business owner. Your primary goals will become selling franchises and supporting franchisees, instead of selling burgers or giving customers advice. Are you going to be comfortable having a new role as a teacher and salesperson, as opposed to being out there, doing it yourself? You’ll also need to be prepared to relinquish some control over how your business concept is executed. Your franchisees may do a great job, but in a different way to you.
Where to now?
Now we’ve covered the basics, why not check out options for further education on franchising? In Australia we have the FCA Franchise Academy who introduced nationally recognised qualifications in Franchising. They offer Certificate and Diploma level courses in Franchising. The FCA Franchise Academy offers a career path via industry specific education enabling individuals to pursue continuing professional development drawing upon the expertise & experience of leaders within the sector. Their courses present up to date knowledge and relevant theory together with practical skills that can be applied immediately in the workplace. Information on the Franchise Academy is available at www.franchiseacademy.org.au. You should also check out the Franchise Council of Australia. They publish and market books on key aspects of franchise decision making, management and practices authored by acknowledged experts in their field.
- Franchise Guide
- Compiling a Franchise Operations Manual
- How to Franchise Your Business: A Guide for Australian Entrepreneurs
- Expanding Internationally: A Guide for Australian Franchise Systems
- Profitable Partnerships
- Franchisor’s Guide to Improving Field Visits
- The Franchise E-Factor
- What Great Retailers Do
- Marketing Works
For full details on these publications and more, visit the FCA website here: https://www.franchise.org.au/franchise-academy.html.
If your business has been operating successfully for at least three years and you think you meet the above criteria then franchising could be the right option for you. Use the available resources, ensure you get proper advice and do as much research as possible before diving in!