advantages of franchising vs. corporate locations
DESCRIPTION
Franchise Growth Partners values building a community of Entrepreneurs of new and emerging franchise companies who share and learn through peer to peer interaction. We currently provide Consulting, Strategic & Operational Business Planning, Franchise Marketing and Lead Generation, Franchise Sales Training Certification, Legal Document Preparation (FDD), Franchisee Operations Manual, and essential support services to companies throughout the United States. Our support services include: Commercial Leasing, Franchisee Funding and a Cloud-based Franchise Operation System.TRANSCRIPT
The Advantages of FranchisingFranchise Development Program
Volume I, No. 1
INTERNATIONAL FRANCHISE ASSOCIATION
®
Franchising offers the following advantages to you, the franchisor:
• Control – less than company owned – generally greater than independent dealers • Thefranchisordoesnotcontroltheday-to-daymanagementofthefranchisee’slocation
• Franchisorsetsbrandstandards • ProductsandServices • ConsumerRelationship • BrandManagement • Marketing
• UnitInvestmentandoperatingcostsaretransferredtofranchisee • Acceleratesexpansion • Nocontingentliabilityonexpansioncapital • Nocontingentliabilityonrealestate • Noequitydilution
• MarketPenetration • Increasedbrandrecognitionasmoreandmorelocationsopen • Abilitytoservesmallermarketsthatmightnotbeattractiveforcorporatedevelopment • Acceleratesmarketdominanceoverlocalcompetitors • Improvesacceptanceandtermsfromlandlord • Increasesvalueofthebrand
• Collectivebuyingpower • Reducescostforproducts,equipment,etc.,becauseofsystempurchasingcapacity • SharedResources • Warehouses,production,anddistribution • Leveragespurchasingpower • BrandMarketingthroughsystemmarketingfund • Allcontributetomoreprofessionaladvertisingandmarketingprogramsandmaterials • Abilitytomaintainwebpresence • Franchiseemanagestheday-to-dayactivitiesoftheirlocalbusinesstosystemstandards • Labor • Inventory
• Franchiseeresponsibletoexecutetobrandstandards
• Reducesperunitcostofsupportforfranchisor
• Franchiseeliableforlocaloperations–substantiallyreducesriskofvicariousliability
• Franchiseemotivatedtosucceed
• Knowledgeableaboutlocalmarkets
• Sourceofnewproductandserviceideas
• Franchiseeatriskforunitperformance
• Generatesrevenue • Fees–initialandongoing • Rebates • Franchiseepurchases
Advantages to You
Franchisingoffersthefollowingadvantagestoindividualbusinessowners(franchisees):
• Useoffranchisor’sbrand
• Useoffranchisor’soperatingsystem
• InitialAssistance • Businessestablishmentandstart-up • Siteselectionandconstructionassistance • Training • Staffingandhiringguidelines • Marketintroductionassistance
• OngoingAssistance • Businessconsultationandguidance • Reducedcostofgoods • Marketingassistance
• Abilitytobeapartofalargerwhole
Advantages to Franchisee
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The Advantages of Franchising
The Advantages of Franchising
Whatoperatingsystemsshouldyouhaveinplacetooperateyourbusiness?
CustomerExperience You must deliver the customer experience on a consistent basis:
• Product/Service • PreparationofProduct • LocationCriteria(siteselection,leasenegotiation,andlegalreview) • Build-OutandDécor • LaborandSchedulingRequirements • Equipment • VehicleRequirements • Ingredients,Products,Supplies • Advertising • CustomerService • Pricing • Inventory • SuppliersandVendors • Training • CanbecodifiedintoOperationsManuals • Canbeoperatedbyatrainedmanager
Training Programs You will need the following training programs in place:
• Allpositionsinthebusiness • Franchiseeandtheirstaff • Whys as well as Hows • Consistentresults • Requiredskillsettobehired • Specializedbackgrounds • Timetoachieveproficiency
Marketing&AdvertisingPrograms You will need the following marketing and advertising programs:
• BrandIdentityandDevelopment • PricingPhilosophy • LocalMarketAdaptations • AdvertisingandMarketingMaterials • Assistfranchiseestointroducetheconceptorthebrandintoanewmarket • CorporateIdentity
Legal&RegulatoryRequirements You will need the following legal and regulatory requirements in place:
• FederalLevel • StateLevel • LocalLevel • LicensesandCertifications • FranchiseOwnership
AcceptableReturnonInvestment Is there the opportunity for an acceptable return on investment?
• NoGuarantees • Franchisorsandfranchiseescananddofail • Opportunityforanacceptablereturnbasedoneconomicmodeling • Franchisor • Reasonabletimeandgrowthrate • Franchisee • Earnalivingorbuildabusiness
YourCompany&Franchising You must identify whether your company culture lends itself to a franchising model:
• Franchisesaregovernedbythecontractbutmanagedbyrelationships • Doyoucarewhatothersthink? • Canyouenforcestandardsagainsta“friend”? • Canyoufollowtherequirementsofthecontract? • Canyoucomplywithfranchiseregulations?
Overviewofthe FranchiseSystem
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The Advantages of Franchising
Overviewofthe FranchiseSystem (continued)
Products&Services You must be able to supply products and services to your franchisees:
• Suppliers’relationshipsinplace • Areyourcurrentsupplierspositionedtogrowwithyou? • Doyouhavetheabilitytoprotectyour“secretsauce”? • Willyoursuppliersworkwithyouwhileyougrowyourfranchisesystem? • Doyouhavebackupsuppliersidentified?
CompetitiveFranchiseOffer You must identify how competitive your franchise offer is:
• Poolofprospectivefranchisees • Affordabilityofthefranchise • Othertermsoftheagreement • Operatingstandards • Territory • Feesandrequiredpurchases • Otherrights/obligations • Abilityoffranchiseestoobtainfinancing
FranchiseExpectations You must consider how realistic your franchise expectations are:
• Growthoffranchisenetwork • Abilitytoprovideopeningandongoingsupport • Activelyevolveandmanagethebrand • Providemanagementtoolstofranchisees • Enforcestandards • Financialinvestmentrequiredtobeginfranchising • Expectedrevenuefromfranchising
Settingthe Expectations
Youareembarkingonanewexcitingvoyage,andinyourinitialoptimismyoumightnotanticipate the potential storms to come:
Atsomepointyourgrowthwillplateau!Whetheryouhitthisgrowthbarrierat10, 30, 60, or 90 operatingunits,thesolutiontoachievingabreakthroughbeginsinaskingtherightquestion. Wearetemptedtoaskthewrongquestionfirst,“HowdoIgetmyfranchisesystemtogrow?” Therightquestionis,“Whatispreventingmyfranchisesystemfromgrowing?Whatismy Achilles’heel?”
ItisessentialtorecognizeyourspecificAchilles’heelandtakeproactivemeasurestopreventplateauing.ThefivemajorAchilles’heelstoeveryfranchisorare:Leadership,Management,OperationalPerformance(Franchisor/Franchisee),Administration,andFinancialManagement.
Youneedtothinkaboutyourexitstrategy.Willyousellthecompany,gopublic,leaveitasalegacy foryourchildren,hireaprofessionalmanagementteamsoyoucanretire,etc.?Theseareimportantdecisionstobemadebeforewecanproperlydesignyourfranchisecompany.Youmustkeeptheend inmindsothatyourfranchisecompanyisbuiltonafoundationtoachievethisgoal.
BreakingThrough GrowthBarriers
KeepingtheEnd inMind(ExitStrategy)
YourRole as a Leader
Thereareanumberofcomponentsessentialtoyoursuccess,growth,andprofitability.Morethanlikelyyouwilldelegatemanyofthese;nonetheless,youmaintainultimateaccountability.Thefollowing factorsarenecessarytobuildasolidbaseforafranchisecompany:
• Leadership • Management • OperationalPerformance(Franchisor/Franchisee) • Administration • FinancialManagement
Asyourstrategicpartnerinfranchisesystemdevelopment,FranchiseGrowthPartners holdsitselfresponsibletogrowingwithyouthroughnovice,apprentice,journeymantomaster-levelCEOleadershipskills.
3625ThousandOaksBlvd.,Suite228,WestlakeVillage,CA91361phone:800.471.1682•fax:805.496.4284•franchisegrowthpartners.com INTERNATIONAL FRANCHISE ASSOCIATION
®