Ever wonder how franchisees interact with their franchisor? Most franchises choose one of two ways for providing sales and support services to franchisees: directly by the franchise company to the individual franchisees (known as direct franchising) or via a master franchisee.
If the franchise is expanding via master franchisees, it means they’ve contracted with a person or entity to provide services to franchisees in a specified territory or country.
The master franchisee typically pays the franchise company a significant initial fee for the rights to develop the territory and then retains most or all the initial fees and royalty fees paid over time by the individual franchisees in the territory.
That master is usually responsible for recruiting the individual franchisees and providing all training and support they need, both initially and on an ongoing basis. Franchise companies often select the master approach in the belief it will result in more rapid system growth with less initial capital risk for the company.
What You Need to Know
There is no reason for you, the franchise buyer, to place a higher value on either the direct or master approach. Each strategy can be effective or terrible, depending on the skills and resources brought to the selected approach.
One significant difference between these strategies relates to your research. In the case of a master, you need to completely and somewhat independently investigate both the franchise company and the master organisation.
Keep in mind the saying that ‘you’re only as strong as your weakest link.’ A great master can’t do anything about a franchise system that does not have a strong, viable business model to take their concept to market. Conversely, even a strong and viable business model can be invalidated by a weak or ineffective master franchisee.
Whether you choose a franchise with a direct or a master approach, you should be aware of the fact that the skills needed to provide effective franchise sales results are quite different from the skills needed to provide operational and marketing support to an operating business. One of the red flags in any master situation (or direct, for that matter) is when you find one person who is purporting to do both these jobs.
As a franchisee, you’re going to need a strong franchise sales effort to build the value of the brand around your operation. You won’t get that value if they can’t sell effectively. You’re also going to need support to help you operate the business effectively, and you typically don’t get that from a sales person. You really need both skills, so make sure you have talented people in both positions, especially in a master approach.
Investing in the Master
If you decide to investigate a master franchise, visit a number of franchisees from all over the system. Then visit a significant number of franchisees located in the territory of the master you’ll be working with. You need to see a strong track record in each iteration before you proceed.
If you like and are confident with either the franchise company or the master, but not both, you have a serious problem. If the problem lies with the franchise company, forget this one and find a different franchise opportunity. This is the only safe and smart move to make.
If the problem lies with the specific master you would be working with, you can either relocate to a different territory that has a good master or find a different franchise opportunity altogether. In any case, do not assume you will have an experience different from the majority of the franchisees you visit during your research calls – that’s a recipe for disaster.
As a final note, when you investigate a master franchise company and you are located in a territory that doesn’t have a master yet, watch to see if the company immediately tries to sell you on being the master. Though this may seem like an incredible compliment, don’t let your ego get in the way of your common sense. If you don’t have experience in franchise sales, marketing and operations, you’re looking at a huge risk.
Remember that a job offer from NASA doesn’t automatically make you a rocket scientist. If you’re thinking of becoming a master franchisee, at the very least you should carefully research the previous experience of the other successful masters to make sure you have the necessary skills and capital to make this opportunity a good one for you. l
Develop Digital Marketing Competency In 3 Simple Steps
Conquering the digital revolution needn’t be daunting. Polish up your tech skills and watch your digital marketing prowess increase throughout your franchise.
As a franchisor, digital marketing may be proving to be a challenge due to the unique structuring of the business.
“The very nature of franchises is ‘structured’, however, when it comes to marketing, that structure often lacks,” says Marcela De Vivo, Founder and CEO of Gryffin Media.
Franchisors and franchisees often struggle to reach common ground when looking to achieve different marketing goals. While the franchisor needs to control the brand in its entirety, the franchisee wants to market their business using particular strategies suited to their location.
Research has found that smartphones are the biggest influencers of 82% of users when they make their in-store purchase decisions while. It’s for this reason that the importance of digital marketing for franchises has increased.
Here’s how to harness its power of influence, amplify foot traffic and solidify brand loyalty:
1. Recruit digital natives and early adopters
As much as you’re the leader of your franchise network, there are franchisees in your chain you could learn from. The global increase in millennial franchise owners means it is highly likely that you’ll be able to identify early digital adopters within your franchise network.
“The best people to learn from are those who have been in your shoes before,” says Matt Forman of the Franchise Centre at Griffith University.
“Encourage and support their efforts and use them as case studies to demonstrate to the rest of your franchisees the value of digital marketing, and how to do it right.”
2. Invest in training your team
“Each digital competency level requires more education and resources in order to integrate digital marketing with your physical stores,” says Forman. For this reason, regularly investing in continuous training for your team so as to ensure they keep abreast of any new and emerging trends.
Proactivity and adapting to the constantly evolving digital landscape led KFC to open a LinkedIn account for its founder and mascot Colonel Sanders. KFC’s out of the box tactic is a fresh approach to what has long been considered a B2B platform, under-utilised as a B2C platform.
3. Apply custom targeting techniques
The discovery of new and small businesses is being fuelled by Google searches, social media and online reviews, making these platforms a goldmine of invaluable tools.
Leveraging certain custom targeting techniques like easily searchable keywords and exposure on other reputable and high-traffic websites, gives your franchise’s digital marketing efforts a boost. This results in an effective campaign, favourable reviews and meaningful and lasting interactions with consumers “whether it’s a reply to a Facebook comment or a retweet,” says Entrepreneur’s Emily Conklin.
How To Hire Skilled Workers For Your Franchise
Your staff run your business – you just have to show them how. This is why employing the best people for the job is essential.
According to the Franchise Association of South Africa (FASA) 2017 Franchisor Survey, one of the main challenges facing franchisees is finding the right staff.
“Staffing your franchise can be one of the most challenging parts of running a successful business. Without a great team of employees, you cannot run your business effectively,” says Saxon Marsden-Huggins, founder of WebRover.
These three tips could help you find the best employees for your franchise outlet:
1. Don’t hire in haste
While you may be rearing to go and keen to fill gaps to speed up profitability, research your candidates thoroughly.
As the job applications keep flowing into your inbox, keep in mind that not all of them qualify for the positions available – it may even be a small percent who are actually viable candidates. This is why your hiring process should include:
- Taking the time to thoroughly screen CVs to develop a short list
- Creating a carefully crafted list of interview questions
- Setting aside adequate time for thorough interviews
- Getting to know the candidates through a second round of interviews to confirm your choice.
Giving the hiring process dedication and attention will ensure you get the cream of the crop, contributing to the long-term success of your franchise.
2. Demonstrate support in the workplace
While you can instil the necessary skills into new recruits, it’s difficult to train for culture. This is why choosing the right employees from the beginning will make the rest of your franchise management system will run more smoothly.
“The manner by which you run the franchise will influence employee perceptions of the brand as well,” says Hireology’s Erin Borgerson. “Your staff must become ambassadors of your franchise system to attract the target consumer market.”
The best way to do this is encouraging staff to give you their honest feedback. Your commitment to creating and upholding a positive culture will result in increased loyalty from your current staff and a superior pool of applicants.
3. Offer appealing incentives
When advancement opportunities are clearly communicated, staff is keen to hear how they can get there, as they have career goals of their own. Encouraging this ambition will draw good employees to your franchise.
“Helping employees understand the steps to advancement helps them to view their current job as an important part of a career with an upward path, not just a pay cheque for this week,” say financial reporting technology experts at Qvinci.
Performance bonuses and employee benefits incentivise staff’s efforts, therefore increasing their income alongside the profit of the business. “This serves to make employees a part of the business and not merely people ‘who work there’,” they explain.
3 Ways Communication Helps You Run Your Franchise Better
Managing your business as an independent owner may have been challenging at the beginning, but – as you’ve come to realise – the successful operation of a franchise network requires an extended set of skills.
“When it comes to a multi-location business such as a franchise, effective communication is vital,” says Dani Peleva, Managing Director at online marketing agency Local Fame. “So what happens when you’re struggling to connect with the franchise network you have in place?”
It may be time to upgrade your franchise management skills, because the success of your franchise network has a direct correlation to how you integrate feedback systems into your management processes.
Have a clear comprehension of the challenges your franchise encounters, keep an open chain of communication between yourself, franchisees and managers, and maintain regular interactions between everyone in the network. These are some of the most crucial aspects of successful franchise management:
1. Understand the challenges you face
A thorough understanding of your business requires dedication to regular and consistent groundwork for first-hand experience on how the day-to-day operations of the business are conducted.
“Seeing and talking to the people that make your business will help you understand the challenges that franchisees face and the systems they need to drive higher profitability and growth,” says Rosie Niblock, Marketing and Communications Manager at Proactive Marketing.
“That way you can work more effectively to make improvements to franchise management systems logically and within the financial grasp of all franchisees.”
2. Get personal through regular visits
You never want your franchises to feel neglected. It’ll demoralise them and possibly drop sales, profits and their ability to keep the business running as you intended. Maintaining regular contact and sharing as much information as possible – when you can – fosters strong relations with your franchisees.
Empowerment through information and communication makes a difference in the business and helps franchisees make decisions in favour of the business and to make sure that they all pull in the same direction in terms of customer satisfaction, says Alan van der Westhuizen, executive manager of new business sales at Fournews, a 20-year-old franchise holding company for News Café, Krispy Kreme, Moyo, Brooklyn Brothers, Smooch, Cafe Fino and Go! outlets.
Ensure your response to these concerns is swift. “If not discussed they could fester ad create undesirable rumours,” says Niblock.
3. Create events for network collaboration
One of the most important aspects of managing your franchise is meeting with all your franchisees, at least annually. “Franchise conventions are almost certainly the biggest tool when it comes to building profitable engagement,” says Peleva. “They’re one of the most important things to focus on when you’re considering how to lead your franchise network.” According to her, a successfully attended and executed convention will let you:
- Boost your network-wide productivity
- Hugely increase your profitability
- Drive passion for your brand
Communicating with your franchisees is the best way to identify problems, work towards solving them, and building a pleasant and fruitful relationship with your owners.
- Growing A Successful Trappers Franchise Into A R300 Million Business
- New Fund For Small Businesses To Be Developed
- How To Think Like A Billionaire
- Relax Spas Founder Noli Mini Shares Her Insights On Building A Business Of Value
- What It Will Really Take For South Africa’s Businesses To Scale And Create Jobs
- Silver Linings For Smaller Businesses In Budget 2018
- Leadership: What Is Your Why? (Read Purpose)
Sign-up for Daily Newsletters
Start-up Industry Specific3 months ago
How Do I Start A Transport Or Logistics Business?
Company Posts1 month ago
Enhance Your Entrepreneurial Flair With An Online Postgraduate Diploma From The University Of Pretoria
Start-up Advice1 month ago
9 Quotes Every Entrepreneur Should Live By
Lessons Learnt2 months ago
15 Wise Insights From 15 Entrepreneurial Icons