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The Quality-Control Myth

Use motivated and committed management to maintain the value of your franchise system.

Mark Siebert

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Time and again, prospective franchisors say that the only thing holding them back from franchising their business is the fear that franchisees won’t sustain the quality standards they’ve established. A typical lament is, “I’ve worked too long and too hard building this brand to let someone else screw it up.”

Frankly, I’m always heartened when I hear these words, because that tells me the prospective franchisor is focusing on the right things. Maintaining quality in your franchise system should be a key focus for a franchisor. This is what differentiates great franchise brands from those that don’t succeed.

What’s more, if done correctly, franchising can improve quality.

That’s right: franchising, done right, can be responsible for increased quality.

The problem is that many people who contemplate franchising associate franchised operations with fast food. In doing so, they confuse the ultimate quality of the product (which can be judged as low) with the quality of the operation.

The fact of the matter is that McDonald’s is among the world’s most quality-oriented brands, but the value proposition and price point aren’t appropriate for steak and lobster. There are, however, high-end franchise brands known for detailed attention to quality.

Quality is not about what’s on the menu; it’s about consistency of the operation.

The Hen and the Pig

When entrepreneurs fear a loss of quality, what they really fear is a loss of control. As a franchisor, they cannot fire a franchisee simply because they don’t like the way the franchisee runs a unit. They cannot fire the franchisee’s unit managers or employees. And they cannot force the franchisee to comply with their standards in the same way their own employees do.

But a closer examination of the situation tells a different story.

The franchisor has a tremendous amount of power over the franchisee. With a unit manager, poor performance can lead to job loss. With a franchisee, poor performance can lead to the loss of the entire franchise, which in turn can lead to the loss of the franchisee’s investment, home, lifestyle, children’s college fund and retirement plans.

There’s an old joke about a bacon-and-egg breakfast. The hen was involved, but the pig was committed. And it’s precisely that type of do-or-die commitment that a franchisee brings to the table.

The franchisee is not only committed, but is also motivated to excel, as the rewards for strong performance far exceed the rewards associated with managing a business. In addition to increased compensation they’re likely to achieve from a strong performance, franchisees can build the business and, in the long term, sell that business as an asset.

Franchisees are also motivated by pride of ownership. They relate to their businesses far more deeply than even the best employee can. In fact, time and again when I see a franchise system that has trouble controlling quality, it’s often the best franchisees of that system who complain the loudest about poor franchisees that aren’t maintaining standards.

Finally, franchisees almost always have a longer tenure on the job than managers. Over time, these owner-operators continue to accumulate knowledge and expertise. Most managers, on the other hand, move on, leaving the business owner to hire, train and supervise a new manager who, in turn, will leave the system in a similar bind years (or even months) down the line.

Here’s the bottom line: in many ways, franchising facilitates improvements in quality at the unit level. One study on this subject showed that franchisees outperformed their company-owned counterparts by an average of 10% to 30%. In addition, case studies abound in which franchisees, who’ve taken over stores previously run by managers, are able to increase sales by 30% or more almost overnight. I’ve even heard from more than one franchisor who stopped running their own operations because they couldn’t manage them as well as the franchisees.

Highly motivated franchisees drive a higher unit volume.

Whether it’s because they run their units better, work later, do a better job with add-on sales or are simply more involved in their communities, their consumers are voting with their money, and the results say it all.

Talk is Cheap

Of course, franchising alone is not a prescription for quality. When it comes to quality control, there will be good franchisors, and there will be bad franchisors. From a franchisor’s standpoint, there are four pillars of quality and each of them has a cost.

– Franchisee selection

– Franchisee training

– Ongoing support

– Compliance

Quality starts with franchisee selection.

The best franchisors award franchises only to well-qualified candidates, and they walk away from the rest. Of course, that means the franchisor will sacrifice the fees and royalties he might have obtained from those rejected, but in exchange, quality is maintained.

Training also comes with a cost – in terms of time, salaries and the expense associated with developing training programmes and learning management systems. But training is equally as important as franchisee selection when it comes to maintaining the brand. The best franchisors routinely provide the most – and the most comprehensive – training to their franchisees.

Ongoing support can come in many forms and, again, all of them come at a cost. Field support has associated salary and travel costs, so the frequency and length of site visits will increase staffing ratios and associated expenses. Advertising, purchasing, public relations, technology, the list goes on and on. All have associated costs, but all also contribute to both higher-quality and more profitable franchisees.

Exit Strategy

Finally, the franchisor must be committed to compliance with the franchise’s systems and standards. While the franchisor cannot fire franchisees the way that he or she could fire an employee, a well-crafted contract will grant the franchisor the ability to terminate a non-compliant franchisee. From a quality control perspective, the question isn’t whether a franchisor can enforce these standards, but rather if the franchisor will. Enforcing standards, when done from day one, can be relatively painless, but it must be done.

If standards aren’t rigorously enforced from day one, chances are these standards will continue to slip, and in the process, they’ll become more and more difficult to maintain. Again, maintaining compliance comes at a cost – ranging from the costs of having an attorney send a compliance letter to the costs of franchisee termination (and potentially the costs of defending that termination), along with the forgone royalties such a termination would entail.

Quality control is all about commitment. For a good franchisee, that commitment comes naturally. For the franchisor, it comes at a price. But franchisors who are willing to pay that price will find their ability to build a quality brand greatly enhanced.

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.

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Company Posts

Spur’s Got A Taste For Success

With eight brands across five countries, the Spur Corp’s secret sauce to success has all the best ingredients — most importantly, its franchisees. Sacha du Plessis, Group Marketing Executive at Spur Corporation, explains the company’s 51-year journey in creating some of the most popular places to eat the world over.

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What is the biggest contributor to Spur’s success?

Since the beginning, we’ve made an unwavering commitment to run restaurants that are operated by entrepreneurially-minded owners who put the customer first. Customer satisfaction is one of Spur Corporation’s most important value drivers, we partner with people who ensure we retain and grow a loyal customer base. We seek to work with franchisees who take pride in the training of their staff and prepare food with passion.

This mindset has been alive for over 50 years in our staff and franchisees.

Please share some of the challenges Spur encounters as a franchisor?

We have a sizable franchise network and a big priority is to ensure that we meet customers’ expectations in every single franchise they visit. Another challenge is finding the best franchisees to partner with, people who are aligned with our company values and customer orientation.

In terms of growth, it is sometimes challenging to find the correct locations per brand and to ensure the rental is at a level where it’s sustainable for the franchisee. The management of our marketing communication to ensure we remain relevant and distinctive in an ever changing landscape can also be a challenge.

Related: A Three-Pronged Approach To Franchise Success

Name a few of the qualities you look for when selecting franchisees?

Our business was built on a highly focused customer orientation and centred on a love for food. Our franchisees need to be focused on the customer: Pleasing the customer, meeting the customers’ needs and being willing to spend large amounts of time in growing a business that essentially is the hospitality industry and is really about people. Our franchisees are people who have an appreciation for, and love, food as well as serving their local community over and above their product.

Why is Spur a solid investment for entrepreneurs seeking to pursue franchising?

We’ve invested greatly in growing our brand over a long period of time. Spur was founded by our Executive Chairman Allen Ambor in the spirit of entrepreneurship. Over the past 51 years, we’ve built a track-record of comprehensive operational, finance, marketing, IT, training, procurement, distribution and development support. Our marketing approach grows sustainable brands in a considered and well researched manner.

Our customer scope is broad, so while our main brands are focused on the wider South African market, we also have niche brands. This track record reassures the franchisee and broader market about Spur Corporation’s credibility.

What kind of support can a franchisee expect when joining Spur?

Franchisees can tap into expertise that’s been built up over five decades. We provide franchisees with the most effective tools to help manage and sustain their businesses successfully. Our operational support is wide-reaching and includes access to procurement, development, logistical as well as IT support. Skills development is one of the most important ways in which Spur Corporation supports its franchisees to run successful businesses.

Marketing support enables franchisees to actively identify opportunities and get assistance in developing and implementing bespoke marketing plans for each restaurant. Most importantly, when a franchisee joins Spur Group he or she gets access to cutting-edge management know-how from an experienced team of people who are passionate about our business.

Related: Nedbank’s Full Service Offering for Franchise Owners 

Why is it important for successful franchises such as yours to have a strong banking partner and how does it benefit the franchisee?

Buying into a brand is a substantial investment for a franchisee, so they need a banking partner that will help with financial planning and running the business. Nedbank has built relationships with franchisees while helping to open and maintain their businesses.

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Muscle And Grill Is Your Daily Chef. We Provide Fresh, Nutritional Food At Affordable Prices

It isn’t always easy to stay in tune with both body and mind. We do all the prepping for you so that you can keep up your pursuit of greatness.

Muscle and Grill

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Vital stats

Muscle and Grill is a healthy fast food establishment based in South Africa. In the face of modern South Africa, lives spent on the go require a fuel to match their aspirations while maintaining a delicious, fast and fresh service.

As our lives swirl into life’s vast depths of opportunity, our bodies are often the product of poor health habits, while trying to keep on the move to achieve our goals. Muscle and Grill challenges this. We want to be able to support the South Africa of tomorrow by offering the food your body needs to keep reaching new heights – to keep pushing the boundaries of accomplishment with health food convenience.

At Muscle and Grill we’ve got you covered. We provide nutritional fast food that is fresh and affordable. We have your health at heart. You could start your day off with some free-range scrambled eggs or fresh oats – for lunch a mixed bowl of rice, protein and fresh vegetables – or to round off your day, replenish your mind and body with a hearty health-infused burger and all its wholesome goodness. We have not forgotten that home constitutes a hungry family who have all been active, so grab a lean beef pasta salad with some greens on the side to go.

Related: SA Fast Food Franchising On The Rise

It isn’t always easy to stay in tune with both body and mind. We do all the prepping for you so that you can keep up your pursuit of greatness.

About us

It was once said that great ideas are born from ones’ frustrations. That is exactly how Muscle and Grill came about. Having no real on-the-go option to stay healthy, or having the time to prepare to be healthy, became a huge frustration for us. We struggled to find enough hours in the day to keep up with a busy lifestyle and still eat healthy while on the move. Our work came first and our lifestyles suffered.

The vision for Muscle and Grill is to make it possible to stay healthy on the go. We want healthy food to be easily accessible for all walks of life.

Our mission is to provide quality, healthy fast-food. The food we provide is delicious and will keep you coming back for more.

Concept

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Muscle and Grill works on an almost self-service basis. The point of sale system is customer operated where you can select what meal you would like to have. Once payment has been processed electronically the kitchen staff will receive the order and prepare it to spec. Muscle and Grill will be a completely cashless business, making it super-efficient for consumers and business owners.

Related: 3 Crucial Considerations For New Multi-unit Franchisees

The concept of Muscle and Grill is partnered with Puré Frooty. Puré Frooty is a self-service smoothie bar which prepares smoothies for you at the touch of a button. You can have a store with or without a machine – the choice is yours. Both concepts look to promote the idea of healthy living on the go.

We’ve looked to compliment our values by looking after that which grounds us. Our packaging and utensils are all eco-friendly, as we believe ‘going-green’ is not just a choice of eating but of the environment too.

So, when you are ready to join the next revolution in the fast food industry contact Muscle and Grill at info@muscleandgrill.co.za or visit the website at www.muscleandgrill.co.za to inquire on our franchise options today. Achieve your goals, stay on the move and look after yourself through Muscle and Grill.

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Nando’s Is Firing Up The East

Carlos Duarte has been part of the Nando’s brand since inception. When his brother Fernando co-founded the flamed grilled chicken brand in 1987, Carlos soon participated in its success and today owns four highly successful franchises in Johannesburg — three in the east and one in the south. Here’s how it all began.

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Vital Stats

  • Player: Carlos Duarte
  • Franchise: Nando’s
  • Position: Franchisee
  • Visit: www.nandos.co.za

What were you doing before becoming a franchisee?

I was in the audio visual technology field, as an employee. Then I joined Nando’s as an assistant manager in the Savoy and Rosettenville corporate stores. Franchising was my first experience of entrepreneurship.

Why did you decide to become a franchisee?

When my brother, Fernando Duarte, launched Nando’s in 1987, I noticed its quick growth and wanted in on the action. Being assistant store manager prepared me for when the opportunity to run my own store came along soon after.

What prompted you to partner with Nando’s?

I joined Nando’s in 1991 as a joint venture partner. At the time, Nando’s hadn’t yet franchised its operations, and the JV partnership meant the brand owned 51% of the business, while I owned 49%. My first franchise store was in Edenglen in 2001.

Related: (Watch) Why Nando’s Is Clucking Its Way To The Top

Describe some of the challenges of running not one, but four franchise locations

At the Edenglen store, we initially battled with sales and getting feet into the store. To be honest, I think the area was overtraded at the time, so it wasn’t the best location. Since acquiring the store in Lambton, Germiston, another in Greenstone and a third in Comaro, I’ve learnt to be cleverer in how I do things — and how I handle some of the same challenges — and learn every day from the brand itself.

Name some of the benefits you’ve experienced as a Nando’s franchisee

Nando’s is 31 years old this year. We’re in 30-odd countries worldwide with thousands of stores across the globe. As franchisees, we leverage off the dynamism of an operational business that’s known for its marketing — customers talk about our ads and they love our food.

What kind of support do you receive from Nando’s as a multi-unit franchisee?

Besides the popular marketing campaigns that attract customers, Nando’s has an extensive training manual along with a skills development training consultant who comes to the store for two days to help staff understand and implement it. The training is really effective — it has to be as this industry involves a very high turnover of staff and new skills need to be taught often.

Why is it important for a franchisee to have a good banking partner?

As a franchisee, your bank should understand your business — from operating costs, to overdraft needs and revamping expenses — so it has cash available for loans that can be approved quickly, with minimal hassle. On the technical side, a reliable mPOS device is imperative, especially for us, because 30% of our sales volumes are from home and office deliveries. It’s a fundamental method of payment every bank should provide its customers of a similar nature.


What advice do you have for budding franchisees on seeking out a good franchise brand and banking partner for their business?

  • Do your research to ensure you’re partnering with a brand that is established, well-known and expect to pay a fair price for that franchise.
  • Be aware of how the franchise brand is perceived in the market and what location opportunities are available to you as a franchisee.
  • Choose a banking facility that always has the funds available to grow your business.
  • Ensure the bank understands the brand’s business model and where you’re falling short.

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