A: If you’ve decided to franchise your business, you may be wondering how much support you will need to provide to help your franchisees succeed.
Let me start by saying that supporting your franchise owners at a high level is extremely important, for several reasons. Firstly, it’s going to help you maximize your potential. Increasing the revenues that your franchisees collect increases your royalties. Secondly, it’ll help you to build strong relationships with your franchisees and increase the respect that they have for you, which will allow you to implement changes if you need to and give you a greater level of influence with your franchisees.
It’ll also ensure that your franchisees validate well for you in the sales process. Validation is the term that we use in franchising to mean whether your franchisees say great things about you—and those recommendations will help you to sell franchises going forward. And finally, it’s going to help you reduce the chances of any litigation in your system.
But bear in mind, when we’re talking about support, one size does not fit all. Some companies, for example, will have physical locations; some companies don’t. Some companies are going to expand much more aggressively as franchisors. Some might do multi-unit offerings, some might do area development offerings, some might do other kinds of offerings as well. The industry you belong to is also going to determine the level and type of support you’ll need to provide. For example, if you’re in the restaurant industry, you may need to provide a lot more support, because if your franchisee’s not well-trained you can poison your patrons.
I break the kind of support you provide your franchise into two basic buckets. The first is the onboarding bucket: what you’re going to do to help franchisees when they first get started as a franchisor. These are things like site selection, lease negotiation, facility design, construction, and initial training. This can come in the form of remote training, onsite training, training at your head office, and grand opening support.
In each of these areas, it’s important that you document the processes that franchisees are expected to follow, and the support resources that are available to the franchise owners. Franchisees who are first-time business owners, in particular, are going to look to you for detailed guidance about how to get started.
Areas like site selection and lease negotiation are very important if you have a site-dependent business. Be sure that if you are going to be involved in this, that prior to accepting any location that the franchisee wishes to pursue, it’s important that they’ve completed their due diligence and that you’ve completed whatever due diligence is part of your process. Make sure that the LOI (letter of intent) that they submit and the lease they sign contains the use clauses and other terms that are going to help protect your brand, your intellectual property, and their interest as well.
When it comes to ongoing support, this encompasses areas like business coaching, training, ongoing marketing research and development, supply chain management, and finding new and better pricing. It’s also important to implement benchmarking, especially looking at KPIs (key performance indicators) within the system, to measure your franchisees’ success.
Make sure that when you’re talking to your franchisees, that they understand what kind of ongoing support and training you’re going to be offering. The ongoing support that you provide your franchise owners should focus on helping them to continually increase revenues and control their costs. Additionally, your job is to make sure that you establish your credibility as an effective business coach for them.
In order to understand your franchisees’ needs, you should make sure that you have detailed data coming from the franchisees, from a POS (point of sale) or CRM (customer relationship management) system, and that you’re getting monthly financial statements from the franchisee.
If you develop credibility with your franchisees through a strong, relational system of support, you’re going to be able to implement changes in the system and improve your franchisees’ performance, which will in turn help grow the system much more quickly and with a greater level of quality.
This article was adapted from Franchise Canada’s How to Franchise Your Business video series. Watch the full video and find more helpful content here!
CEO, iFranchise Group