Pitfalls lie in wait for unwary expanders. Franchisor Angela De Souza offers advice based on her own experience
Franchising may appeal to many as a way to expand a business that is already working well or it could be seen as a way to grow an existing business faster. Whatever the appeal or call to franchising, there are a few things to consider first. In fact, I made all the rookie mistakes that most new franchisors would make, so save yourself some time, money and heartache and learn from my top five franchising mistakes (yes, there are many more).
Defining the business model
Before you can franchise your business it’s essential to clearly define and thoroughly test the model. My very first franchise attempt was based on my business model and that was working swimmingly. However, it was run by me specifically, not by anyone else. The model didn’t work for people with different temperaments, people with different skills and different experience to me. I nearly drove myself mad trying to get my franchisees to do what I did, expecting the same results that I achieved!
It just didn’t work, so I scrapped franchise attempt number one and went back to the drawing board. Any franchise model needs to be based on averages and tested on a variety of people. The questions to ask are “What is the average that my ideal franchisees can achieve in this model?” and “What sort of people are suitable to this franchise?”. Selling a franchise on a best-case scenario is dangerous as you are likely to over-promise and under-deliver, leaving the franchisees frustrated and ultimately angry. This can lead to a nasty legal battle when they want out of their contract, or cause serious damage to your brand.
Pricing the model
Another mistake I made was with pricing the franchise model. Again, it worked for me as a standalone but it didn’t perform well with the franchise fees deducted from their earnings.
In theory, it worked perfectly as I based my calculations on my performance, but no one is going to run my model as well as I can – they don’t get it like I do – and they don’t have the years of experience in my specific model. It’s not reasonable to expect them to get the same results that I can achieve.
The model needs to be priced on averages and tested on a variety of people. Selling a franchise on a best-case scenario is dangerous, as you are back to the first problem of over-promising and under-delivering. The one thing worse than franchisees who are disappointed in your model are franchisees who aren’t happy with what they are earning!
Focusing on the sale
It’s easy to get over-passionate about the potential in your franchise and lose sight of mistakes four and five because you are just so excited to sell your business! Focusing on the sale rather than serving your ideal clients with your solution is a rookie mistake not only for franchisors but for business owners in general.
I have learned this from bitter experience: I don’t want to sell my franchise any more, it’s not for sale! Rather, I recruit franchisees. It’s a recruitment process, not a sales process as I ultimately have to trust them with my brand and reputation – if they get it wrong, they can ruin all that I have tried to build. Each franchisee is thoroughly vetted, interviewed and approved. To date, my best franchisees all started as clients. You may find that your ideal franchisees are closer than you realise, just take a look at fans of your brand.
Misunderstanding the franchisees
One of the mistakes that I am not proud of is seeing a conflict from only my point of view. Franchisees don’t understand how much hurt they can cause when they start wanting to change the business model that you have painstakingly laboured for years to create, or when they complain and say it doesn’t work but they haven’t actually followed the handbook instructions.
The bottom line is that there is a lot of harm that your franchisees can do to you and your business but more often than not their complaints and frustrations are completely valid to them. To quickly defuse a situation with a franchisee, validate their feelings! See it from their point of view. Show them that you care and understand. Try to find a solution. Franchising is very much like a marriage, you have to learn to get along.
Not everyone is suitable
I can’t help but continue with the marriage analogy because you wouldn’t marry just anyone, would you? Well, I hope not! Choosing a franchisee is a similar process and if you want the relationship to last you need to be picky about who you recruit. Not everyone is suitable and not every franchise relationship will work. It is essential to understand exactly who your ideal franchisee is in exactly the same way you would understand who your ideal clients are. If you are happy for absolutely anyone to buy your franchise then you are in for a lot of soul-destroying trouble. Play the long game, play to win, play to keep your franchisees around for life as they will become your templates and close family who will attract more of the same.
ABOUT THE AUTHOR
Angela De Souza is CEO of the Women’s Business Club, a trusted business support community connecting, supporting and empowering professional women through a national network of meetups, mastermind boardrooms and an annual maximise conference.