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Right franchisor key to franchisee survival says industry veteran
The economy’s positive turnaround is prompting more Australians to seek out franchise business opportunities but franchising veteran Steve Hansen is warning potential franchisees to choose their franchisor carefully to ensure their long-term business survival. Mr Hansen, who has been in the Australian franchising industry for 26 years and heads up franchise chain CHOOKS fresh & tasty, said the advantage of franchising was a person could run a business with on hand support through a successful proven franchise group but only if the right system was selected.
“There are thousands of franchise systems in Australia to choose from but those seriously considering purchasing a franchise need do their homework and find out all they can about the franchise group they’re thinking of signing up to in order to ensure the business success and the support they’re entitled to,” he said. Mr Hansen said there were a number of “must have” factors potential franchisees needed to look out for in a potential franchisor:
1. Franchising is all about systems so you must check your potential franchise group’s operational systems are in place. Manuals, checklists and everything that a franchisee needs must be available, systematised and written in the right sequence so you can run your franchise effectively.
2. Ensure the franchise system you’re thinking of signing up to is transparent and ethical. How do you find out if your franchisor is trustworthy and will do the right thing by you? Simply talk to their current franchisees. Usually you are supplied with contact details once you’ve reached the stage of signing the franchise agreement.
3. Your potential franchisor must have a vision for the future and know how to plan strategically otherwise where is the company headed? There should be a business plan in writing that you should ask to see.
4. Your franchisor must have the ability to change with the times. If a company cannot adapt to changes in the marketplace it can quickly become stagnant. Ask for examples that show how the business has progressed.
5. The benefit of franchising is the support a franchisee receives from the franchisor and there must be infrastructure to do this. The franchisor must have ethical people in place in marketing, finance and other areas to advise what is best for franchisees and help provide franchisee support.
6. Good communication is crucial for the franchisee/franchisor relationship and there must be systems in place to do this. For example, at CHOOKS we have an intranet and bi-annual conferences so we can keep our franchisees up-to-date with what is happening within the group and the industry. We also have three Guiding Coaches which are essentially field support managers assisting our franchisees on a weekly to monthly basis – whatever is necessary to provide sufficient support for each franchisee. A franchisor should be communicating either through a field support manager or internal communication method at least once a week at a minimum to keep them informed about what going on within the franchise group.
7. A franchisor needs to have a good financial model in place which can be shared with franchisees. Most franchisors are too scared to do this but franchisees have the right to know how that area works and are able to go away and do the sums.
8. A franchisor needs to be able to communicate what the franchise is, what it does, what the term is and how it works in the long term so a potential franchisee is aware of all the terms and conditions. Mr Hansen said these tips were essential but only a starting point to the research process a person needed to do when considering purchasing a franchise. “If you are not sure of what to look for in a franchisor don’t be afraid to obtain advice. Talk to friends or family who already own a franchise or seek out help from a professional franchising body such as the Franchise Council of Australia – visit www.franchise.org.au.”
