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Franchisee Advice

Be On Good Terms with Your Franchisor

Here’s what you, as franchisee, should expect from your relationship with the franchisor.

Mark Siebert

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It’s not a marriage

  • What is the main challenge facing any new franchisee?
  • Is it the rental of a business space?
  • Is it managing the daily running costs?
  • Is it finding the right staff members?
  • Or perhaps the difficulty of dealing with established competitors?

No, it’s none of these. Sure, these are all important issues that need to be addressed, but there is an even bigger challenge: Managing the relationship with one’s franchisor, according to the 2014 Franchise Association of South Africa (FASA) Franchisee Survey.

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Of all the franchisees questioned during the survey, 28% cited the relationship with the franchisor as being the main challenge.

This makes it, by quite some margin, the biggest issue facing new franchisees (second place is a tie at 13% between managing staff and paying franchise fees).

The main problem is that franchisees (and even many franchisors) define the nature of the relationship incorrectly.

Far too often, it is described as a marriage, but it isn’t that at all. It is actually more of a parental relationship than anything else.

Why it’s not a marriage

We’ve often heard people compare the franchisor-franchisee relationship to that of a marriage.

They will talk about the ‘honeymoon’ period and how the franchisor and franchisee are in ‘partnership’ together for a common purpose. And while this analogy may have some merit, a marriage is exactly what the franchise relationship should not be.

When we think of marriage, we think of a joint-venture relationship. In a joint venture, there are partners. Because of the relatively equal footing of the ‘partners’, the typical joint venture starts out with a negotiation – and is often a series of ongoing negotiations.

Like a marriage, there are the ‘who does the dishes’ issues, and then there are the more serious issues, such as money. Because each joint venture is unique, every one of these issues is usually subject to negotiation.

Because a joint-venture partner is usually compensated based on how much money goes to the bottom line, one concern that most ‘marriages’ have is how the accounting gets done.

On a one-off basis, this is fairly easy to monitor. But on a massive scale, it is almost impossible. And when your joint venture spouse cheats on you, it can become a battle among equals in divorce court.

In fact, that is one of the big differences we find between franchising and joint ventures.

Unlike partnerships, franchising is much more like a parent-child relationship. The franchisee, like the child, will go through a variety of growth phases.

When children first come on the scene, they are very dependent on their parents, relying on them for the education and training that will allow them to survive in this world. And as they grow older, they become less dependent, and parents begin to allow them some latitude.

As they get older still, they will begin to test the boundaries of their relationship, pushing a little around the edges, trying to change or influence the system that parents have set for them, and perhaps breaking some of the rules.

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But the child is still a dependent. It is simply a question of how forcefully the parent chooses to put their foot down.

The good parent

business-contract

The franchisor needs to start by establishing the boundaries of the relationship. It is important for the franchisee to understand that the franchisor’s first role as ‘guardian’ is to guard the system and the brand so all franchisees can thrive.

Thus, one of the most important roles of the franchisor is that of disciplinarian. To do that, it needs to clearly communicate the rules and the intention to enforce them right from the start.

At the same time, it is important for the franchisor to understand that discipline can no longer be meted out exactly as it was before franchising took place. If franchisors try to give a franchisee the ‘it’s my way or the highway’ speech that worked so well before, they’ll quickly find themselves with alienated franchisees — the first step on the road to real trouble.

Franchisees are business owners, and as such, require franchisors to communicate with them in a professional manner. Being firm with franchisees, as opposed to managers, also means providing them with an explanation for various ‘requests’.

Most franchisees have a key desire for their opinions to be heard. A franchisor should thus avoid making decisions in a vacuum and providing direction to franchisees without a clear explanation of why the direction is being given.

Communication is key

The secret to a good relationship between franchisor and franchisee starts with communication. And that means more than the occasional newsletter and a visit from the field representative.

In today’s technology-centred society, it is all too tempting to rely on the Internet for all communication. But in a franchise context, that would be a big mistake. All too often, we have seen well-intentioned emails ignite a firestorm when they are misinterpreted.

Relationships are built through dialogue, so it’s important that dialogue be encouraged in every aspect of the relationship. Good franchisors are careful to create multiple venues where constructive dialogue can occur.

Annual conventions, regional meetings and advertising councils all provide opportunities for two-way communication.

The accessibility of senior staff is also vital. There are senior executives of some fast-growing franchisors who would not go home for the night until they had personally returned every franchisee’s call.

To be effective, the communication needs to be more than frequent. It needs to be honest. While there are some things franchisors may choose not to share with their franchisees, the key to a long-term sustained relationship is trust. And trust starts with openness and honesty. Get caught in a lie once, and you have destroyed that trust forever.

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Lastly, to be effective, franchisors have to genuinely care about the success of their franchisees. Good franchisee relationships start with a franchisor that is, first and foremost, committed to franchisee success.

That commitment, more than anything else, needs to permeate the franchisor organisation at every level.

If franchisees do not sense true commitment from franchisors, a relationship could quickly become adversarial. If, on the other hand, franchisees see franchisors breaking their backs to help them achieve their success, there is almost nothing they won’t do to assist.

As a franchise consultant since 1985, Mark Siebert founded the iFranchise Group, a franchise consulting firm, in 1999. During his career, Mark has personally assisted more than 30 Fortune 1000 companies and over 200 startup franchisors. He regularly conducts workshops and seminars on franchising around the world. For more than a decade, Mark also has been actively involved in assisting U.S. franchisors in expanding abroad. In 2001, he co-founded Franchise Investors Inc., an investment firm specializing in franchise companies. He's on the board of directors of the American Association of Franchisees and Dealers and the board of advisors to Connections for Community Ownership, which encourages minority business and job development through franchising.

Franchisee Advice

3 Ways To Ensure Your Loyalty Programme is Working Hard For You

Plastic cards are making way for app-based loyalty programmes. Is your franchise keeping up with the digitally savvy consumer?

Diana Albertyn

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The average consumer today is a member of at least five of the 100-plus loyalty programmes in South Africa, according to a 2017 study by Nielsen. As the loyalty playing field becomes more cluttered and competitive, what are you doing to ensure each one of your franchisees are catering to customer needs when it comes to loyalty?

Mobility. It’s not the newest buzzword, but it is useful for attracting customers who don’t want to lose loyalty points because their card is lost or not with them. Ailsa Wingfield, Nielsen’s Head of Emerging Markets: Thought Leadership, says that as adoption of non-traditional payment methods increases, loyalty programmes also need to introduce payment type flexibility.

“Mobile payment platforms will increasingly deliver an opportunity for loyalty-programme engagement with consumers, providing a convenient and personalised way for programme members and retailers to engage with one another all along the path to purchase.” – Ailsa Wingfield Nielsen Head of Emerging Markets Thought Leadership.

Related: 11 Ways To Double Your Customers In 4 Weeks

Have you considered what role tech could play in your current loyalty programme? Here are three ways to apply digital enhancements that appeal to present and potential customers: 

1. Offer differentiation through more options

Research has concluded that the loyalty programmes devised by retailers and franchises are not innovative enough to capture the attention of the youth – Millennials and Gen Z. it’s time to diversify your rewards offering. But how?

If your customer base is predominantly younger, being omni-present is key, according to the Truth Loyalty Whitepaper: “An omni-channel approach will not only meet the demands of the younger customer, it will also allow your business to combine intelligence on shopping, search and web behaviour history to assist you in identifying when to offer an in-store promotion, extend a seasonal offer or make a product recommendation through the appropriate channels.”

Implementing a digital loyalty campaign is also a smart way to reduce costs. Coffee shop franchise Mugg & Bean’s Generous Rewards App and partnership with Vitality Active Rewards, means members can earn cash-back rewards to spend on their favourites. Just downloading the app earns you a R25 voucher.

2. Use your tools to engage more

A crucial mistake most franchisors make is not communicating consistently with their loyalty programme members once they’ve signed up and increased numbers. They spend a lot of time recruiting customers to join, but expect them to prompt cashiers for points’ balances and produce their cards independently in their various locations.

“You have gained permission to talk to your customers and created the opportunity to collect enormous amounts of valuable data. Use this to your advantage by creating meaningful and relevant engagement initiatives and communications across your customers’ lifecycle,” advises Truth, a boutique consultancy business specialising in customer centricity and loyalty programme strategy and design.

When enhancing your engagement strategy, Accenture advises that you keep the following in mind:

  • 54% of South African consumers are loyal to brands that actively engage them to help design or co-create products or services.
  • 57% are loyal to organisations that present them with new experiences, products or services.
  • 47% are loyal to brands that engage them in ‘multi-sensory’ experiences, using new technologies such as virtual reality or augmented reality.

Related: 3 Ways To Stop Taking Your Most Loyal Customers For Granted

3. Keep the experience simple

Review your loyalty programme. Honestly. Then ask yourself if you’ve made your programme too complicated for the layman. If your answer is ‘no’ or even ‘maybe’, how can your target consumer ever reap the full rewards of this programme if they don’t understand the rewards on offer and how to redeem them?

Changing rules too often is the first complication to go. No matter which one of your stores they choose to shop at, the redemption and earning process should be simple enough to keep members interested and engaged in the programme. Make sure you keep your programme simple and transparent.

“Clicks made a simple but fundamental change to its redemption process – paper-vouchers were replaced with virtual points that can be redeemed as cash-back when you swipe your card at the till. While Clicks and Dis-Chem are among only a handful of brands that do this, it’s a sure-fire mechanism for increasing redemption,” said Amanda Cromhout, founder and CEO of Truth.

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Franchisee Advice

3 Crucial Considerations For New Multi-unit Franchisees

Your marked success as a single-unit franchisee has led to the choice to multiply your achievement. But do you know what it really takes to move from owner-operator, to multi-outlet operator?

Diana Albertyn

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Multi-unit franchise ownership is a brilliant way to grow your business portfolio, once you’re successfully running your single location. Once you get the hang of being franchise business owner, adding one or a few more units could be the next logical step.

“The risk with having one store is higher than if you have more than one store, as the stores support one another. When the one is down the other one is up,” says multi-unit Montagu franchise owner Pierre Lombard.

You’ve probably already realised this lucrative option and are getting acquainted with multi-unit franchising. As this is new territory, you may want to consider these methods to multiply your success.

1. Make more discerning recruitment choices

When you opened shop at your first location, you were probably warned against hiring a manager, because they may not be as invested in the success of your business as you are. Now that you growing, you have no choice, so you need to be selective in your decision of who’s going to run the show when you’re not around.

Related: 3 Employment Best Practices To Apply In Your Franchise

The best way to ensure consistency in service and quality in each location is to always put culture fit over ability. While a certain level of skill is required to carry out the tasks required of a manager, attitude trumps aptitude when selecting capability running your locations.

“Place one of your outstanding managers or staff from your current store in the new one and have them train up any new staff,” suggests Francesca Nicasio, Retail Expert at Vend.

“That way the practices and attitude that you’ve cultivated in your business will continue into your new store.”

2. You need tech to help you be everywhere

Not only are Cloud technologies enabling franchise owners to scale quickly, easily and more affordably compared to on-site solutions, but these advancements mean you can remotely optimise inventory across all your locations, get a more accurate assessment each store’s performance and better understand your business – all you need is an Internet connection.

With the variety of Cloud-based solutions available today, you’re also able to connect your sales, staff, and customer information to give customers a seamless experience at all locations. You’re also able to receive alerts on low stock levels and automatically have it.

3. Set and stick to a specific standard

As a franchisee, consistency is standard practice. But that’s easy done as a single-unit owner than when running multiple locations. To make your mini network more manageable, ensure all your store understand brand standards beyond the operation manual.

Related: Multi-Unit Franchising Growing In South Africa

“Naturally, you have your franchise systems’ operations manual and procedures but the way you personally want to stamp your mark on customer experience, for instance, needs to be documented too,” experts at Inside Franchise Business advise.

Doing this reduces the stress of continually keeping tabs on staff, and frees you up to collect and collate the data you need to make smarter decisions faster.

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Franchisee Advice

Effective Ways To Bring Customers To Your Door

Here are a few tips from Local Area Marketing Manager of Cash Converters, Juan Botha, to assist you in bringing customers to knock on your door.

Richard Mukheibir

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Retail, craft, artisan and service businesses can’t rely on only carrying on trade online – you also need people coming through the door and engaging with your product. But how do they find you? Are you the neighbourhood’s “best-kept secret” – and not in a good way?

Your premises, the surrounding area and the audience for your brand are a unique combination. Get to know both inside out so that you can hone your products and your marketing to appeal to potential local customers. With all the pressure to run a website, Facebook page or maintain other online presence, it’s easy to forget the basics and fail to reach your closest customers – those on your doorstep.

Our Local Area Marketing Manager, Juan Botha, previously worked in advertising with local and multinational brands and he taught us how each store needs to make sure its marketing lives up to the pointer, “Act global, think local”.

Related: How Your Fast Food Franchise Can Attract Quality-Conscious Consumers

Here are a few of his tips:

Position yourself

If customers know about you but can’t find you, they’re likely to get frustrated looking for you and give up. If they don’t even know you’re there to find, your chances of using your sales skills with them or getting them to fall in love with your product are zero.

Remember the times you’ve spent searching for a bar or a restaurant hidden in a maze of city streets or a B&B somewhere along a never-ending country road? Those businesses have forgotten that first-time customers can’t be sure where they are. Draw up directions to include on your website or online page. Make sure a friend who doesn’t know the area well test drives them.

Brand yourself

People won’t notice you until they need or want what you are offering so keep reminding them of your existence. Being visible is key. Your fascia signage is part of your marketing mission to attract and influence potential customers.

Nobody walking to work or taking their dog out should think, “I wonder what that new place is about?”

As well as giving your business’s name and contact details, your signage must succinctly indicate what your business offers. If you have a display window, use this second important opportunity to sum up your offering – keep it interesting and updated.

Be a customer magnet

If you wait to build a business on passing trade, you could wait forever. Get on the radar with potential customers in the neighbourhood so they all know you exist and where to find you. Each time they’re reminded that you exist and how to find you, they will be prompted to come and seek you out.

You can achieve this – and help new customers trying to find you – by making a modest investment in lamp-post signage. Check local regulations with your municipality and ensure this signage reflects your brand visually. This is a win-win, reinforcing your brand in a potential customer’s mind and helping them recognise your premises as they approach.

Related: Why Your Franchise Brand Should Be Culturally Relevant

Connect locally

Part of marketing is making people interested in and attracted to your business long before their first direct contact with you. Embed yourself in the community by forming alliances.

If security is an issue, bond with the local SAPS, Community Policing Forum and security companies by offering them free coffee. If you have a huge bargain order of toys to shift, offer a few prizes to the local Moms ‘n Tots group. Plug into local business networks and offer to host a speaker or sponsor the audio equipment for a forthcoming meeting.

You’ll be harnessing the incomparable power of word-of-mouth and setting your business growing in a great direction.

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