The Top 10 Secrets to Successful Franchising
Have you ever been at a presentation and felt that the presenter took the words right out of your mouth? Well, that’s how I felt when I recently had the opportunity to hear Ken Otto, president of Cara Operations, talk to a room full of early and veteran franchisors.
In case you are not familiar, Cara Operations owns multiple successful franchise brands, including Montana’s, Swiss Chalet, and Milestone’s to name a few. The focus of the talk was on how to run a successful franchise, with emphasis on the differences between running a franchise versus running a traditional corporation. The 10 points were so aligned with what I preach as the key elements to understanding franchising!
I’m super excited to share with you these 10 secrets to successful franchising. They are based on Ken’s key points and my many years of involvement with the iconic Canadian brand, M&M Meat Shops, my conversations with my network of franchise industry leaders, my research and my work with clients.
Here we go!
1. Make sure you have the DNA to be a franchisor
According to Ken, there are many differences between leading a corporation versus leading a franchise. In a corporation, you are responsible for the company’s profits and brand reputation. In a franchise, you are responsible for people’s livelihood!
While the franchisee has a responsibility to follow the system, it is up to you to stay innovative and creative with your brand and your operating system so that at the end of the day, the franchisee is getting a return on their investment.
Franchisees are going to be the judge and jury EVERY single day because they have quite likely put most of their life savings on the line to become a part of your brand. There’s a lot more emotion in this game. You are going to need to know how to listen with ears wide open. As a franchisor, you are getting into the relationship business. When you screw up, they are going to call you out, so you need to have thick skin! If this doesn’t scare you off and you think you can handle it, then let’s continue on to secret #2.
2. You need a GREAT idea that makes money
This point seems pretty obvious but there are a lot of not-so-great ideas out there that just aren’t going to get their hook in anyone. An idea might seem great but unless the business model you implement to sell that product or service can actually turn a profit at the end of the day, it just isn’t going to work for franchising. It is amazing how many entrepreneurs franchise their business without first having a business model figured out that can be replicated so that franchisees can make money. Still with me? Let’s continue on to the third secret.
3. You need to have a sector leading “Unit Economic Model” (UEM)
Make sure your unit model i.e. the original business that you decided to franchise, is profitable. Just like a house needs a solid foundation, your business model needs to have a solid base! Figure it out and really test it before you franchise. And make sure you are the best at it! Know what sets you apart from the competition i.e. know your “Single Unit Proposition”, sometimes referred to as your competitive advantage or your differentiator. Be the amazing house that stands out among the rest on the block!
4. Have military like operations with a hint of entrepreneurism
Be clear on your operational systems i.e. the formula for success for your franchise units. Make sure everyone is following the system so that the brand remains consistent, but give the franchisees a little room to play. Give them opportunities to provide feedback about operations on the front line. Often the best ideas for change come from the franchisees or their staff.
A franchise advisory council (FAC) is a great way to enable some creativity. As much as possible, try to implement suggestions from your FAC, so that when you need to make a corporate decision, the franchise body will be more accepting.
5. Celebrate everything!
Have a party every day! Who doesn’t love a party?!? Companies often get complacent and forget to recognize the little victories. These little victories all contribute to the overall success of the company. Examples of what to celebrate include things like the approval of a new franchisee, a great new idea, and the completion of a project or task.
In a franchise you often have lots of people out there running their business in small towns on their own. Include them in the celebrations so that they feel part of the team and stay motivated and engaged to succeed. Send them a personal note, call them personally to recognize their successes and honour them at team meetings and conventions.
6. Share everything!
Okay, folks, back to kindergarten. Kids were always happiest and really thrived when they learned to share. Same thing in franchising. As a franchisor, you are going to need to be very transparent. Seems quite the opposite of the corporate approach where the cards are held closer to the chest. Share with the franchisees the marketing plan, every new commercial, expansion plans, etc.! And be open to feedback through your Franchise Advisory Council and all the other portals you have set up for communication.
Work together people. This really is starting to sound like kindergarten! Work with the franchisees to develop the marketing plan, a commercial, a 5 year plan or even when picking out tile for the floor. If your company is larger and it seems completely impractical to collaborate like this, then work with your FAC so that all franchisees can in one way or another be involved in decision making.
You might be thinking to yourself that this must take a lot of time. Well, it does! In a corporation things can move much quicker because the top executives make all the decisions. Decision making in a franchise requires time and patience from all parties.
8. Be Compassionate
People have likely given up almost their entire life savings to buy into your brand. Compassion is the ESSENCE of what makes franchising work. Be a bold leader, take risks, but lend and ear, and listen. Again, this takes time, but being compassionate is critical to the success of a franchise. This was one of the key messages repeated over and over again by high-level franchise experts at the recent Canadian Franchise Association Convention.
(To read the other key messages from the convention, click here).
When franchisees know you advocate for them, they become loyal. Your field team are your key advocates but every single person on your corporate team has to advocate for your franchisees. And I mean everyone! This includes your people in operations, marketing, finance, human resources, legal, I.T. and even your suppliers. Foster this advocacy in your office by teaching all your corporate people the phrase: “I am your advocate”.
Innovation is great for the company to stay competitive and successful but as Ken put it, it is a bit of a yin and yang scenario, because innovation means change. Some franchisees love change while some have a tough time with it. Many franchisees don’t get to take a vacation until they finally have their system running smoothly and to have the franchisor come along and tell them they need to learn a new way or invest in new infrastructure can be quite stressful. Whether the franchisee likes change or not, it does help to keep them engaged and reduces complacency.
Ken Otto’s closing words in his presentation were that franchising is:
“more difficult, but more interesting and more passionate”
than running a traditional corporation.
Do you have passion and an understanding of relationships? Up for a challenge? If you think you’ve got what it takes, I can help you make the transition to franchise your business. Or perhaps you are already a franchisor but need a little help with your franchising success. I’m here for you! Let’s chat.
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