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Tuesday 5th July, 2022

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People Power
People Power


People Power

It’s a truism that your most important resource is your people says HR expert, Gemma Tumelty

In franchising, as with any business, people are our greatest assets. The employees of the franchisor, the franchisees and their staff all have their role to play in maintaining the relationship with the most important people of all, the customers. It therefore stands to reason that recruiting and training the right personnel throughout a franchise business is a critical factor in both growth and brand sustainability. Yet too often franchisors are so desperate to recruit and grow their network that they skip steps, ignore warning signs and hope for the best. It’s been said that in the past that if they had a pulse and a wallet, they were good to go. Needless to say that’s a recipe for disaster.

In any organisation, the most effective recruitment of staff is a complex and thorough procedure. The first step is to advertise the post, selling the business and the opportunity and being clear on skills needed. Next is sifting through applicants and interviewing on the basis of knowledge, attitude, skills, experience and alignment with the culture and values of the organisation. You may profile that potential employee, you may conduct interview exercises and tests and you would then background check and ask for references.

Why on earth then would you do any differently in recruiting a franchisee to entrust with your brand and business model? The shortcut to business ‘success’, selling a franchise to anyone who is keen and interested, may bring immediate rewards but it’s hardly the way to build a brand which establishes confidence and credibility.

I recognise that recruiting franchisees is one of the most difficult aspects of franchising. Indeed it is often quoted by franchisors as being their biggest challenge. Finding the right people at the right time to become franchisees is hard enough for any system, regardless of the level of competition between franchisors for franchisees and the extensive compliance requirements in some countries.

But the pressures which lead to mistakes should not be excused or given in to. No matter how onerous finding the right people may be, the mistakes that poor recruitment can result in will be infinitely more energy-zapping, time-draining and costly to your business. Franchisees should also remember that bad recruitment of employees can be a costly mistake, too. Estimates vary as to the exact impact on the bottom line of a business, but it certainly goes further than the fees you have wasted with a recruitment agency. Other risks include theft or embezzlement by a disgruntled member of staff, damaged employee relations and morale among those who remain, lost productivity, litigation, public scandals and negative publicity and also disruption to relationships which have been fostered with clients.

However, getting recruitment wrong with an employee is, whilst frustrating and incurring unwanted costs, not usually the end of the world. And while bad franchisee recruitment does not always cause major problems, the stakes are usually higher when it is a business owner who has responsibility for part of your brand reputation. And the necessary intervention required by the franchisor, alongside the risk of brand damage and even court action, is in my opinion usually more damaging to your business.

What a distraction from your business and your work to support the good franchisees! All the time, energy and money wasted could have been better spent elsewhere. So don’t chase the money now, think long-term, about whether you want and trust this person to be your business partner under your brand, possibly risking all the blood, sweat and tears you have spent building it up to what it is today.

The right people

What you need above all, is for your franchisees to fit with your values and your culture. You need them to understand and believe passionately in the brand and their ability to contribute to it and be successful in their own right. A good franchisee needs to be a go-getter, a self-starter but also compliant and systems-oriented, they need to trust the model and want to build it. Franchisees need to realise that they are not buying a job. Owning a franchise means running a business and if you ask anyone who has set up as a sole trader or a one-man-band, it is far from risk-free and is rarely, if ever, a get rich quick scheme.

Managing expectations is one of the most crucial things you will do as a franchisor. You don’t want to dampen their dreams or take the wind out of their sails but, at the same time, make sure you do not store up problems for yourself later on. In your keenness to sell, do not over-promise. The risk of doing so is that, when your franchisee under-delivers on unrealistic aims you allowed to build up, confidence is lost and the relationship between franchisor and franchisee becomes irreparable.

Depending on the business and franchise system they may need to be qualified in a certain skills set or have professional qualifications. If no qualifications are needed, are you clear on your desirable skills set and personality profile that are needed to maximise their chances of success? It’s all part of your brand, after all. Why not conduct a research project of your top-performing franchisees and create a benchmark of the type of person who would be more likely to succeed in your model? This might also help in crafting your key messages for recruitment advertising, speaking to the people you most want to sign up.

Franchisee support

Many of the concerns that franchisors should bear in mind when choosing their franchisees apply to franchisees who are taking on employees, so I won’t spend too much time detailing them again now. However, it is worth remembering the much-used saying that ‘culture eats strategy for breakfast’. You can have all the plans you want but if every single person within the organisation does not live and breathes the culture, then the business will suffer. In a franchise organisation you will have direct employees in the head office and then the employees of the franchisees. So as a franchisor, it is worth thinking about how you support the franchisees to induct and train their staff in the brand, in the culture and make them feel part of the wider organisation?

Do you make sure that your franchisees are treating their staff fairly, pay them correctly and ensure their workplace health and safety? If not, it’s high time you did. High profile cases in America with McDonald’s and Australia with 7-Eleven have seen franchisors impacted by their franchisees underpaying their staff or treating them unfairly. Protect your brand and the employees within it by supporting your franchisees to stay on the right side of the law. Staff can be the biggest advocates and salespeople for a brand, get it wrong and your organisation will suffer.

So what about franchisors who have developed their businesses to such an extent that they are looking to branch out into new territory altogether, and looking to find a master franchisee to help them do so? Taking your successful and well-developed franchise brand international via a master franchisee is a big step requiring a lot of people, time and money resources, and whilst this is a potentially exciting and profitable venture, get it wrong and the brand damage and cost to the business can once again be huge, potentially ruining it for good in that country.

The master franchisee is primarily responsible for recruiting and managing unit franchisees within a designated area or country, so the skill set is different to that of your normal franchisee. Master franchisees must be able to develop the sales and service standards of your business in this new territory, uphold your vision and brand image, and also identify franchisees in their territory that will do the same. Master franchisees should possess strong management skills. Experience in the specific industry is desirable, as is experience in franchising – one of these is essential and I would certainly advise you to find someone with both.

The role of a master franchisee requires ambition and business skills. It requires someone who can help drive others to build their business, real people skills, the ability to manage and motivate, problem-solving skills as well as knowledge of recruiting and marketing. However, the excitement of launching into a new country, the relatively narrow pool of qualified and cashed up individuals or organisations with the desire to invest in your brand may cloud even the most sensible franchisor’s judgement.

I write this as the managing director of an organisation that is currently seeking the right partner to launch our brand into our chosen market, Australia. Writing it is helping me reminding myself and our board not to get carried away, not to ignore any red flags, not to jump in unless we are absolutely convinced that the fit both in terms of experience and values are aligned. As with any franchisee/franchisor relationship it’s important to have clarity from the beginning over expectations and goals. Without alignment of goals and transparency and trust between the parties it’s hard to make the franchisee role viable.

About the author

Gemma Tumelty is managing director of The HR Dept, the UK’s largest network of HR professionals. The company has 61 licensees providing outsourced HR support to local businesses in 82 territories around the UK and Ireland and it is set to expand into Australia.

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