Incorrect expectation is the chief reason for disappointment in life… and business. With so many franchise concepts in so many industries, searching for a franchise can be a daunting task.
Aside from finding something that is a good fit for you, your skills, your future and the community in which you will operate, how do you even know if the company itself is worthy of your time, effort and money? What should you expect from your investment?
The good news is that investigating a franchise is great because it’s an investment vehicle that allows you to actually talk with people who have made the investment already. This way you are not just reading spread sheets, brochures or listening to testimonials from people who may be paid actors.
Once you engage in conversations with the franchise representative of the company you’re considering, you will receive a plethora of information boasting about the greatness of the company.
They’ll probably also say why they happen to be the best in their industry and why this is the perfect time to get involved with them. They will probably even throw in a comment about being recession resistant, too.
The voluminous, detailed manuscript about the franchise you’re considering is called the franchise disclosure document (FDD). If you have not heard of this item yet, you certainly will as you plunge into your franchise search.
Although the FDD looks like an overbearing prospectus from a public company, it is really a document that makes the company transparent for the prospective buyer. It is your best friend during the due-diligence process.
You must understand the information given in the FDD. The best thing about the document is that is provides the contact information for every franchise owner in the company at the time of printing, including a list of units that have closed their doors or sold.
However, after distilling and digesting all the information disseminated by the franchise company, the very best way to gain clarity on the franchise and correctly set your expectations, is by talking to their franchisees.
This process of validating the franchise is the single most important thing you can do in your franchise search and it may save you from franchise failure.
Moreover, you’re permitted and encouraged to contact existing franchisees. Great franchise companies want franchise owners to come in educated and with eyes wide open, so there are no surprises.
I have some tips to help with making these calls and face-to-face visits. You need to plan on calling and, when possible, visiting a number of the existing franchisees. Talk with a sufficient number of the existing franchisees to ensure you have a sense of the prevailing attitudes of the group.
You should begin making these calls after the sales person from the company gives the go ahead. (Remember the franchise company is evaluating you on how you follow systems so please follow their process for investigation.)
Find unhappy people
Though you want to find the overwhelming majority of franchisees to be happy and supportive of the franchisor, it is important to try to find an unhappy franchisee during your investigation. When you do, not only listen to the complaints but also try to determine what makes this franchisee different from the rest.
If you find that you identify with the positive ones, and feel the negative franchisees are not at all like you — that’s a good sign.
Remember, evaluating franchise owners is similar to assessing a sports team. The players span a bell curve, meaning that 20% of the players will be the top of the heap, superstars. Next, 60% will be average and doing just fine. Then the other 20% will be under par and sitting on the bench.
You want to emulate the superstars but also know why the under-par performers are not pulling their weight. This will help you define if the franchise is right for you or not.
When you make the call, introduce yourself as a potential franchisee. State the name of the sales person you are working with so that they know you are not the competition spying on the company.
Also, franchisees with businesses very close to your area of interest might have future plans to expand into your area, so often they will attempt to taint the success of the franchise.
I suggest to first talk to franchisees who are far away from where you plan on opening, in order to get a real sense of the company, then talk to local franchisees to see what’s happening in your local market.
If the local owner has some negative things to say, you can hold that up against the other information that you’ve gathered to understand the real, average situation within that franchise company.
A good way to approach this is to begin by calling franchisees with as much history as possible. We want to know early if your financial goals can be achieved. Then call owners with one to two year’s history and focus on break-even expectations. Finally, call a few owners who have just started, as they’ve received the most recent training, and have had recent interactions with the corporate office.
Please note, franchisees from systems that are undergoing significant growth may get inundated with calls from potential owners. It may take a while to connect with these owners. This is a good sign — it means they are out building their businesses and not sitting at home watching daytime TV soaps. Don’t get discouraged, be persistent.
I highly encourage you to make the most of these phone calls. This process may save you lots of time, money and heartache in the long run. I have a list of 39 questions to ask existing franchise owners. Email me for a free copy or go to my website to download the questions.
Enthusiastically following the system I’ve outlined in this article will save you from incorrect business expectations and disappointment in the long run — you’ll thank me later.
How Your Fast Food Franchise Can Attract Quality-Conscious Consumers
In a world where customers are becoming increasingly picky about where they dine and what they pick from a menu, it can be challenging to meet demands.
“Major foodborne illness incidents and outbreaks seem to be increasing. Even innocent or careless mistakes can sicken guests and ruin a restaurant’s reputation,” says Francine Shaw, President of Food Safety Training Solutions Inc. “Foodborne illnesses are 100% preventable and could be avoided if food service organisations adopted a food safety culture.”
Following a listeriosis scare in South Africa early in 2018, consumers have become more conscious about the foods they eat. Today’s customer is more concerned about the cleanliness of the food they buy over its taste.
“How food is sourced, prepared and served is uppermost with many diners demanding transparency when it comes to where they spend their hard-earned money.” – Franchise Association of South Africa (FASA)
The addition of more nutritious choices to your menu may be attracting health-conscious consumers, but it’s the quality of the regular – and perhaps popular – menu items that may win over consumers concerned with quality and not just calorie content.
Here’s how you can ensure your customers are at ease with having their next meal at any of your franchises nationwide:
1. Ensure everyone knows why and how it’s done
Even with buy-in from the top-tier, your food safety efforts will be futile if not incorporated into every training touch point and may appear to be optional, when they should be a priority, says Chris Boyles, vice president for The Steritech Institute. When you have well-trained workers who understand the ‘why’ behind food-quality policies, momentum is built and a culture of food safety is created.
“Through encouraging genuine, comprehensive behavioural shifts, your franchise will protect the brand, safeguard employees and sustain a reduction in risk,” Boyles adds.
2. Build food-quality impetus across the network
As a company that serves food to the public you’re in a position of great responsibility. It’s important to pass this message down to your franchisees too. “Co-operation between the franchisee and their employees in this regard cannot be stressed enough,” says Marcel Strauss, Managing Executive of The Fish & Chip Co. – which was voted the top fish brand in 2012.
To get your franchisees on board with tightened food safety regulations, ensure they’re aware of the looming food-quality changes you’re planning on implementing and the ROI for your brand. This enables them to make budgetary allowance for certain credentials and technology you may require to meet certain standards of food safety.
3. Tell your customers every chance you get
Give consumers a glimpse into your production process by including your quality mission statement on customer-facing materials such as your website, social media pages, profiles on external review sites and menus. “Use stories, images and videos to show your practices in action,” Katy Jones, Chief Marketing Officer at FoodLogiQ explains. “Take customers behind the scenes into internal discussions. Practice is the way you demonstrate your commitment.”
To incorporate quality and safety messaging into customer relations, you need collaboration between your food safety managers and marketing managers.
The Future Of Franchising Looks Smaller (And Fancier)
Franchises are adding smaller locations and reduced menu options, as niche markets emerge, to attract the customer of the future.
As the owner of a thriving franchise, you’re well aware of the fact that fluctuations in the world economy has both negative and positive effects on business. When it comes to your successful franchise, tough times could mean adopting new trends or seizing gaps, potentially resulting in a new franchise concept you wouldn’t have otherwise thought of.
“The buzz word in global franchising is ‘flexibility and adaptability’,” according to the Franchise Association of South Africa (FASA). “Whether a result of a need to inject some life into stagnant franchise brands or as a result of the new world order brought about by the recession, franchising is embracing alternative and options in a big way.”
You can do this by either devising innovative areas to franchise or allowing more flexible ways for franchisees to operate to help with their bottom line. FASA has earmarked these as some of the biggest franchising trends in 2018 and beyond:
Smaller, more cost-effective franchise models
When franchisees don’t have high franchise fees and start-up costs to worry about, they can focus more on what customers want, and deliver. The added benefit of smaller spaces include having fewer employees and reasonable rental.
Among the new frontiers in franchising are the food court losing its legacy as the preferred setting for food franchises, as service stations increase in popularity in the industry. A number of brands – like Steers, Debonairs and Mugg & Bean On-the-Go outlets – are co-locating with major fuel retailers to create fully-integrated accessible centres.
Niche markets are offering one-of-a-kind franchises
“The opportunity to get in on the ground floor of a new franchise trend is also on the rise,” notes FASA. This could be offering a unique gourmet food experience in your outlets or a ‘green’ space of energy saving technology in your operations.
“Consumers have gained control of what they want,” says Morné Cronjé, head of franchising at FNB Business. “It is no longer about what you have on the menu, but how your product or service can be tailor-made to what a customer really wants.”
Founded just five years ago (2013), RocoMamas boasts over 60 franchise outlets, clearly responding to the essence of this trend –allowing consumers to build their own burgers without having to pay for items they’d rather leave out.
Stay ahead of the game
For long-term success, franchisors who want to expand their business should start exploring beyond present circumstances and current predictions.
“2018 will no doubt bring its challenges, however for every challenge there is a window of opportunity to explore. We are advising franchisors to scrutinise these trends carefully, it can definitely give them a boost for 2018,” says Cronjé.
As Consumers’ Tastes Change Can Your Franchise Keep Up?
More of your customers are eating in, and if you’re not packaging, portioning and pricing your food accordingly, they’re heading to a retailer that does.
It’s generally believed that it’s cheaper to cook your own breakfast, lunch or supper than to go out and pay a much higher price for the same food in your fridge at home. But today’s consumer’s live fast-paced lifestyles – so food is becoming more about convenience.
31% of 6 022 middle-to-high income South African earners surveyed by BusinessTech, put eating out and entertainment at the top of their list of things they’re most willing to cut their spending on in 2018 to save money. Research by supermarket giant Pick n Pay correlates, reporting an increase in customers buying quality convenience food, not just to entertain at home, but for dining at home.
Consumers are empowered by variety
You’ve heard about the ‘fast casual generation’, aka Millennials? They are demanding healthy, affordable eating experiences. But do you know how this affects the future of the food industry, and your business in particular – because they’re not the only ones adapting their lifestyles.
An increasing number of food brands and chefs are compelled to create complete ranges of new, convenient meal options that are not only packaged, portioned and precooked attractively, but affordable too.
The fastest growing sector of retail foodservice for the past four years has been the convenience store sector. Non-traditional avenues of distribution are growing, gobbling market share while establishing new patterns of consumption, price points, and customer loyalty.
Shoppers are becoming value-focused
A savvy franchise would acknowledge that although pre-packaged and pre-cooked convenience food isn’t a new trend among consumers and supermarkets, it is gaining popularity. “Some of the most notable trends in 2017 were an increasing shift to convenience foods as customers looked for both value and convenience,” says Pick ‘n Pay’s Head of Marketing, John Bradshaw.
Value for money and healthier food choices will continue to be top of the convenience food list for consumer in 2018, as more shoppers cut down on luxuries.
“We’ve seen significant growth in the number of customers looking for an easy way to enjoy a good meal without the cost of eating out,” says Bradshaw.
But he cautions that South African shoppers have always been value-focused, and while the most significant shift Pick ‘n Pay has seen is how all its shoppers, no matter what their income levels, are watching their budgets.
Start-up Industry Specific2 months ago
How Do I Start A Transport Or Logistics Business?
Snapshots9 years ago
Habari Media: Adrian Hewlett
Snapshots2 months ago
27 Of The Richest People In South Africa
Types of Businesses to Start2 months ago
11 Uniquely South African Business Ideas
Support for Women Entrepreneurs2 months ago
10 Successful SA Women Entrepreneurs’ Top Advice On Balancing Work And Family
Entrepreneur Profiles2 months ago
10 SA Entrepreneurs Who Built Their Businesses From Nothing
Types of Businesses to Start2 months ago
10 Business Ideas Ready To Launch!
Lessons Learnt2 months ago
6 Of The Most Profitable Small Businesses In South Africa